The recent events in the financial market have emphasized on the importance the need for effective regulation of banks and other financial institutions. Rarely since the global depression of the 1920s-30s and the oil shock of the 1970s has financial sector fallout be

It is argued that the fundamental cause of the crisis was the encouragement of financial liberalisation and large inflows of mobile capital into countries, which did not have institutions capable of handling these inflows in a stable and sustainable way. It is important therefore that countries in similar stages of development maintain the right to regulate capital inflows and outflows.

Rather than harmonisation, there seemed to have actually been increased economic and financial divergence with the US in recent times, especially in terms of current account deficits, inflation and interest rates. These increasing disparities had prompted global (and local) financial interests to speculate against the administered exchange rate linkages, i.e. speculative pressure mounted that the monetary authorities in these countries would not be able to hold their exchange rate links. In most cases, such financial speculation has been of sufficient magnitude to actually provoke the collapse of the administered exchange rate links. In the manner of ‘self fulfilling ’prophecies. Defence of then exchange rate through the use of foreign exchange reserves and higher interest rates proved to be insufficient.

Popular in Latin America, and was behind major stabilization efforts in Argentina, Chile

Some topics in this essay:
Mexico According, Malaysia Philippines, , Thailand Indonesia, Asian Financial, Korean War, exchange rate, financial markets, Financial Crisis, IMF IMF, Latin America, international financial, financial institutions, regulation international, exchange rates, financial crisis, international financial markets, rate systems, financial sector, exchange rate systems, regulation international markets, regulation international financial, capital movements, argument forward regulation,