ABSTRACT
This chapter discusses weaknesses of the current international financial system and possibly beneficial reforms. It focuses on the perspective of the countries of Latin America/Caribbean and on relevant lessons from the experience of Canada, a country highly integrated into world and hemispheric trade and financial markets. Though the great bulk of the discussion of capital flows and international financial architecture falls in the area of macroeconomics, it is important not to forget their links with microeconomics, especially the microeconomics which link resource allocation, technological change and investment to growth. Since financial openness is generally expected to contribute to financial complexity and depth, the evidence on how such depth contributes in turn to economic development becomes relevant. The comparison and contrast between the Canadian and American financial experiences highlights the advantages of well capitalized, well regulated, relatively competitive and adaptable systems.
