The problem in the next couple of years will not be too many cross border capital flows, but too few; not too much risk taking, but too little. A retreat into financial autarky and wholesale shunning of risk would be even more damaging than what we have seen to date.
So the challenge in the longer term is to construct a policy regime that handles all the complexity and cyclicality of the system. We need a robust policy regime that can operate effectively, on the assumption that we will never have the full picture of the workings of the financial system and the real economy.