What have we learned from recent financial crises and policy responses?

This paper draws some policy lessons from recent financial crises. Three forms of financial instability are distinguished: short-term volatility, medium-term misalignments including excessive international capital flows, and contagion across both markets and countries. Some underlying factors contributing to each form of instability are identified and specific public policies are recommended to help alleviate each.

Attention is also focused on recent changes in the processes for developing and implementing incremental policies to improve the international financial system. Finally, it is concluded that it would not be appropriate (at this time at least) to try to establish an international superregulator.