But of course, even with the best preventative efforts, we will not totally eliminate the possibility that, from time to time, there will be a crisis in some part of the world because of one shock or another. As I said before, when there is a shock, national macroeconomic policies must be adjusted in response. But this takes time.
And where policies are not particularly credible and markets are getting jittery, the prospect of adjustment down the road may not be enough to restore confidence in the short run. So domestic and foreign investors and creditors may have a strong incentive to pull their funds out of the affected country. This could precipitate a crisis.