International Financial Architecture and the Economic Renaissance in Europe

Over the past decade two transformations have changed the landscape of Europe: the European Union and the transition in East European countries. Countries like Estonia, Hungary, and Poland have become “converging” countries more than emerging countries. Their experience offers insight on aspects of policy design that helped proof them against turbulence in international markets. In a world of liberalized markets, the international financial architecture has to be strengthened by solving some problems like herding behavior and contagion, moral hazard, and information on markets. The International Monetary Fund has to play a big role in these innovations and challenges.