In the case of the United States, sources of poor performance included misaligned incentives in mortgage origination, underwriting, and securitization; riskmanagement deficiencies among financial institutions; conflicts of interest at credit rating agencies; weaknesses in the capitalization and incentive structures of the governmentsponsored enterprises; gaps and weaknesses in the financial regulatory structure; and supervisory failures.
4 In reflecting on this experience, I have gained increased appreciation for the challenges faced by policymakers in emerging market economies who have had to manage large and sometimes volatile capital inflows for the past several decades. The global financial crisis is receding, but capital flows are once again posing some notable challenges for international macroeconomic and financial stability.