Argentina's ongoing crisis demonstrates, if demonstrations are still needed, that emerging market crises remain with us. Indeed, so frequent have such crises been over recent years that we seem almost to take them for granted. In the 120 months of the 1990s, 40 emerging markets (i.e., 33% of the world's developing countries), experienced serious financial distress. So it is time to ask: what viable steps have been taken to create a financial architecture able to contain and reduce this number?

Real progress, I believe, has taken place, but it is insufficient and asymmetric. Positive developments include the expansion and adaptation of new IMF lending facilities for crisis prevention and management, as well as an increase in the IMF's total resources. Important institutional innovations have also been introduced, including creation of the Financial Stability Forum.

Based on a British initiative and developed by Hans Tietmeier (former head of the Bundesbank), the Forum will attempt to identify sources of systemic risk and develop consistent financial regulation across different financial sectors and countries. The FSF was set up by the G-7 in early 1999. The Forum was initially made up of just the G-7 countries, but four new members - Australia, Holland, Hong Kong and Singapore - were added this year.

In addition to national representatives, the Forum's members include international organizations concerned with financial stability. In its first year of operation, the Forum commissioned five working groups to examine issues affecting international financial stability, including highly leveraged institutions, capital flows and offshore financial centers. Yet, despite these developments, overall progress remains insufficient. An international financial system to support - not undermine - growth and development is what the times demand.

The steps that need to be taken internationally for such a system to take root have already been mapped in what was achieved by individual countries over recent decades, when institutions, such as central banks and regulatory agencies, were created to help manage the rapid growth of private banks and financial markets. Drawing a parallel from this national evolution, developing a financial architecture to perform similar functions in the international arena is essential. The rapid, and seemingly ceaseless globalization of private capital makes this more urgent by the day.

Such architecture requires:

appropriate transparency and international regulation of loan and capital markets. Such regulation should discourage severe surges of short-term capital flows to developing countries because, when these are reversed, crisis usually follows;

provision of sufficient official liquidity in when countries face distress. One valuable suggestion is to transform the IMF Contingency Credit Line, which has never been used since its creation two years ago. This Contingency Credit could be adapted so that any country could use it in times of crisis, provided it received a positive report in its annual consultation with the IMF;

a general framework for working out a country's debt problems, to be activated when crises occur.

Progress in reforming the international financial system is also disfigured by the fact that developing countries, most particularly those in Latin America, have not been allowed to participate sufficiently in the key discussions and institutions where decisions are made. For example, Latin American countries have little voice in the Basle Committees and in the Financial Stability Forum.

But a Financial Stability Forum without the emerging economies of Latin America is a bit like Hamlet without the Prince! A more sensible policy would be to have a few emerging market countries participate - on a rotating basis - in this Forum. The issues discussed profoundly affect their economies. Moreover, they can offer valuable insights on financial instability as they have borne the brunt of recent crises.

Across Latin America policymakers fear that if insufficient changes are made in the international financial architecture, there is a serious risk that frequent and costly crises will continue to occur. This would not only have deeply damaging economic and political effects for those countries, such as Argentina today, but could also threaten the public good of global financial stability.