*{Global economy needs efficient rules to preserve investor confidence [http://www.iccwbo.org/home/news_archives/1999/efficient_rules_for_global_economy.asp]
 
Washington, 26 April 1999 –} The main lesson of the recent crisis in emerging markets is that a globalized economy requires more efficient rules and supervisory mechanisms at both national and international level, the International Chamber of Commerce said today.

In a statement on the eve of the World Bank/IMF spring meeting, the Paris-based world business organization said these improved rules were required to avert conditions that gave rise to "sudden and contagious collapses in investor confidence."

ICC, which has thousands of member companies and business associations in 137 countries, said: "It would be a grave mistake to use the current financial crisis affecting many emerging markets as an argument against the liberalization of international capital movements and in favour of controls on capital inflows."

The ICC statement was issued at a meeting of ICC’s Commission on Financial Services and Insurance in Washington, preceding an ICC business conference on financial architecture, liberalization and regulatory reform.

The underlying cause of the crises in most emerging economies affected had been an excess of imprudent borrowing, lending and investment "for which the private sector accepts its share of the blame", ICC said. 

It made these points:
Emerging markets should avoid measures that deter the expansion of foreign direct investment; 
Those markets affected by the financial crisis need the restoration of inflows of shorter-term private finance for funding sound and profitable commercial ventures and for financing trade transactions which will be essential to their economic recovery; 
Regulatory and supervisory rules and procedures within national financial system must be improved – particularly, but by no means only, in emerging market economies; 
The IMF, World Bank, and other intergovernmental financial institutions should improve risk assessment by pursuing greater transparency and more comprehensive reporting. 

ICC said that, in countries with weak financial systems, carefully designed, flexible and temporary measures to discourage excessive inflows of hot money might be a "useful but very second best response."

It added that at a time when private international credit to emerging markets has all but dried up, such measures ran the risk of reinforcing negative perceptions in the eyes of foreign investors.

*{Financial Services and Insurance Commission

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