BIS Review 96/1998  - 17 -  defined international stand-fast and workout arrangements (and “collective action” clauses in bonds which make the possibility of workouts explicit) may cause lenders to focus on the possibility of loss, but wouldn’t that help the moral hazard problems?
If more carefully designed and rigorously enforced prudential controls inhibit some short-term flows, would there be any great loss in that? Clearly, part of the capital surge of the 1990s could, with benefit, have been done without. Is the problem – like advertising – that you do not know which part to stop? No.