The crisis has certainly questioned the efficacy of the existing institutional framework and available policy instruments at the national as well as international levels in ensuring global financial stability. It has raised skepticism about the functioning of financial markets and institutions, in particular their capacity to price, allocate and manage risk efficiently.
It exposed weaknesses in both private sector risk management and inadequacies in the public sector’s oversight of the financial system. The lessons, though are still being distilled, are relevant not only to advanced economies but also to emerging market economies (EMEs). Against this backdrop, I will reflect on the following set of questions.