General Remarks on the Challenges of Globalization

financial architecture in light of recent crisis experiences. Many able, experienced people are participating in an ongoing discussion that focuses on appropriate future changes to the architecture. I am heartened by the fact that the global community has taken up this subject with great seriousness. If the quality of this discussion can be sustained—and I believe it will be sustained—the outcome can be constructive and beneficial for the global community. Many observers and market participants believe that the financial community was poorly prepared for the crisis episodes of 1994–95 and 1997–98 and that the issues that arose were poorly managed. In some respects, we are too hard on ourselves; indeed, significant losses were incurred by many, massive damage was done to several countries, and, for some, effective adjustment and reform were hindered, not helped, by the direct involvement of the public sector in support packages. Nevertheless, the financial system survived, and we have a platform on which to go forward. Beginning in late 1997, there were suggestions that significant change was needed in the financial architecture; some critics asserted that radical reform was necessary. Proposals for a global central bank, global superregulation, and global bankruptcy courts were made in seriousness and with the best of intentions. On the negative side, some people voiced severe criticisms of the rescue packages led by the International Mone-