Building an Infrastructure for Financial Stability: an Overview

Numerous conferences organized in the aftermath of the financial crisis of 1997–98 offered analyses of what went wrong in the crisis countries. The immediacy of the crisis prompted a number of reform proposals directed toward reducing the risk of future crises. However, now that the crisis has abated, reform appears to be much lower on most political agendas, and the progress that countries are making toward implementing reform is rarely the topic of media reports or academic inquiries. The Federal Reserve Bank of Boston’s June 2000 conference “Building an Infrastructure for Financial Stability” attempted to address this deficiency. Conference participants reexamined the recommendations made following the financial crisis and attempted to better understand why the adoption of reforms has proved to be so difficult. Many of the conferences held soon after the crisis examined imbalances in international financial markets as well as imbalances in the macroeconomies of the crisis countries. Recommended policy responses often required some form of global coordination. In contrast, our conference focused on the financial infrastructure of individual countries – legal systems, accounting systems, banking sectors, and securities markets. Several experts highlighted the fact that the countries with the greatest deficiencies in their financial infrastructure experienced the most severe hardship during the crisis. The conference focused on reforms that countries could adopt unilaterally. Participants reported that many of the crisis countries have made substantial improvements on several economic fronts, but they also