Over the past decade two transformations have changed the landscape of Euro
pe: the European Union and the transition in East European countries. Count
ries like Estonia, Hungary, and Poland have become "converging" countries m
ore than emerging countries. Their experience offers insight on aspects of
policy design that helped proof them against turbulence in international ma
rkets. In a world of liberalized markets, the international financial archi
tecture has to be strengthened by solving some problems like herding behavi
or and contagion, moral hazard, and information on markets. The Internation
al Monetary Fund has to play a big role in these innovations and challenges
.