Global Financial Crisis: Role Of International Institutional Framework, And Lessons For Transitional Countries

As the global financial system has become increasingly interconnected, the global institutional framework plays the important role in international financial system stability. The role of international institutions, first of all IMF have been criticized as being less than fully effective, too focused on bilateral issues, and not fully accounting for the risks of contagion that have been seen in the recent crisis. This paper discusses roles of international institutional framework in helping to avoid a future global financial crisis. The following appears to catch particular attention in this paper: a) How to improve Instituting a macro prudential approach to supervision and assigning a clear mandate to a systemic stability regulator; b) How to expand the perimeter of financial sector surveillance to ensure that the systemic risks posed by unregulated or less regulated financial sector segments are addressed; c) How to ensuring that prudential regimes encourage incentives that support systemic stability and discourage regulatory arbitrage, and assure effective enforcement of regulation. The author expects that this paper will catch attention for finding solutions for above cited questions. In this framework the author will try to draw up lessons of the financial crisis for developing future financial institution architecture, and to analyze impact on transitional countries.