During the past two years a series of shock waves rocked the financial markets, giving rise to several damage-limiting efforts under the aegis of the IMF. The success of these interventions was mixed. The quest for meaningful reforms deserves serious attention even if the call for a new global financial architecture triggers unrealistic expectations. Priority should be given to reform in four areas. The most important among them is the exchange rate regime, which should be allowed considerably more flexibility. This becomes compulsively evident when one considers the attempts - most of them abortive - to defend unrealistic exchange rates with the aid of large-scale loans. Secondly, the rapid expansion of credit-granting by the IMF is a cause for concern. The Fund must again place increasing emphasis on its function as advisor and catalyst. Thirdly, practicable solutions involving more burden sharing by private lenders should be accorded high priority even if the chances of success in this field seem extremely small. Finally, international standards with regard to financial regulation, transparency, corporate governance and bankruptcy law must be vigorously promoted.

The financial markets will never be proof against turbulences and disruptions. Their economic implications, however, are so serious that even small improvements are worth a considerable effort.