>Delegates agree the state has a role to play in the financial: sector -
>but what is it?: 07-01-1998
>When Joseph Stiglitz, the World Bank's chief
>economist, told a conference in San Salvador this week that mild
>government restraints in the financial sector might help economic
>growth, a contrary view was soon expressed.
>"I don't know how you can be
>sure that mild does not grow up and become severe," Manuel Guitian,
>director of the International Monetary Fund' s monetary and exchange
>affairs department, told delegates a few hours later, as he urged
>financial market liberalisation on Latin America' s governments.
>Mr Stiglitz pointed to a study showing no link between capital account
>liberalisation and economic growth. "The positive benefits. . . do not
>leap out from the data," he said.
>Attention has focused on the controls of countries such as Chile, which
>in effect deters short-term flows by imposing a reserve requirement. Mr
>Stiglitz said such rules had managed to lengthen the maturity profile of
>capital inflows without significantly reducing their total.