Special section - Redrafting the architecture of the global financial system - Editor's Introduction

After a brief discussion of the characteristics of global financial markets , the paper points out how the current global environment robs government o f their autonomy in setting macroeconomic and development policies. It desc ribes how attempts to set interest rates or exchange rates trigger a financ ial crisis and the usual course of the crisis. It then turns to a discussio n of options still open to developing countries wishing to develop by climb ing the ladder of comparative advantage and points out their larger costs a nd greater uncertainty. Finally, it discusses approaches to reform of the g lobal financial system for short-term capital flows and looks at the recomm endations of individual contributors to this issue, (C) 2000 Published by E lsevier Science Ltd. All rights reserved.