Although market discipline may not have worked in preventing the LTCM event in the first place, the marketplace has reacted appropriately and we have learned much to carry us forward. Banks and securities firms, in their own self-interest, have tightened their risk management processes as they relate to hedge funds. Hedge funds now face a new reality of tougher counterparty oversight.
Impact on Brazil and other emerging market economies  The emerging economies are somewhat concerned about the monetary policy stance not only in Europe, but especially in the United States as well. The Brazilian President, for example, has given a clear warning about the consequences of a generous liquidity policy. She spoke of a “tsunami” of cheap money flooding the world.