Negative shocks, whether they come from poor macroeconomic policy outcomes or from bad luck, will most likely be less acute for the system as a whole in a world of more integrated financial markets.

Further progress in financial integration by itself will not bring a smooth transition to a world with fewer national financial crises with less contagion. The degree of financial stability we face in the future will depend, as always, on a number of other factors, most importantly the wisdom of the choices governments make in economic policy.

Should globalization be allowed to proceed and thereby create an ever more flexible international financial system, history suggests that current imbalances will be defused with little disruption. And if other currencies, such as the euro, emerge to share the dollar's role as a global reserve currency, that process, too, is likely to be benign.