Lesson learnt from the crisis

The international financial system is being revised.

When the crisis arises, it is being revised in response to its failure to anticipate and
overcome the current Asian crisis. The objective of the revision of the Asian crisis is to
strengthening the financial system and architecture for the global market place for the next
generation. According to IMF survey report (September 1998) outlines five elements of this
proposed financial architecture.
1. Providing greater transparency and reporting
Its providing a greater transparency and reporting by public and private sectors for
the better functioning of financial markets. IMF also want to strengthen the
transparency of its own policies and advice through the wider use of Public
Information Notice (PIN) and publication of Policy Framework Papers (PFP).
2. Recognising the importance of the private sector involvement
In order to prevent and resolving the crisis, it is very important for the private sector
to being involved. A more level playing field for the private sector by dismantling
monopolies and setting up simpler, more transparent regulatory systems. This
involves establishing proper incentives to foster sustained private sector participation
in global markets, minimising the risk of sudden withdrawals and avoiding moral
hazard.
3. Encouraging cautious liberalisation of capital movements
The liberalization of capital flows in a prudent and properly sequenced way that will
maximize the benefits and minimize the risks of free capital movements. With
adequate control and supervisory measures in the context of good financial reforms
and balanced macroeconomic policies will enhance the productivity of resource
disbursed to distressed nations.
4. Implementation of internationally accepted standards
Implementation of internationally accepted standards and codes of good practice
especially in areas of accounting, auditing, bankruptcy, and corporate governance.
This standards can be used internationally and accepted by any country in the world.
In short, it will be internationally accepted standards that have been recognise.

5. Provide confidence in restoring financial measure

It will provided confidence for restoring financial measures to reduce vulnerability to
changes in investor sentiment through well capitalised and regulated banking and
financial institutions.

In reality, these proposal are likely the same as those which were suggested during the
Mexican crisis but worded differently. The intention seems noble but unfortunately too
idealistic in practical terms. To date they still working to implement the measures effectively.
The non-imposition of tough punishment on those responsible for todays financial crisis will
certainly create a foundation for a worse financial crisis in the future, just as the Mexican
crisis was the harbinger of the present East Asian crisis.