A broad consensus continues to develop on ways of strengthening the institutional framework at the national and international level to create more robust, and thus more crisis-resistant, economies. Unfortunately, while there is a deepening consensus on key elements about how to promote resilience ex ante, there is no comparable degree of consensus on how best to handle international financial crises once they do erupt, or the proper roles of public institutions and the private sector in containing and resolving such crises. This new environment has important implications for policymakers and market participants alike. On the negative side, crises are more complex and unfold much more quickly and with surprising dimensions. But on the positive side, financial recoveries can proceed more rapidly in today’s environment, particularly with the right policy responses from borrowers. The current case-by-case approach to crisis management needs to evolve in ways that are market-based and adaptive, yet strategic, creative, and principled.
