If law and institutions are important for stable and effective financial systems, how can countries take advantage of research and best practices in their own economies and what can development professionals do to assist? This chapter concludes with a discussion of financial sector design and a suggestion that countries should coherently address the legal and institutional framework of their financial and economic systems on a holistic basis in order to achieve the desired results of financial stability and development.

This final chapter seeks to synthesize the lessons and ideas of the preceding parts and chapters into a set of recommendations for individual economies in respect to supporting economic growth through financial sector development in the context of financial stability. Specifically, it suggests that countries should work actively on these issues themselves. The system of international standards process is a very useful starting point. In addition, however, countries need to carefully consider their own levels of financial and economic structure and development. Appropriate legal and institutional choices should be made on this basis. It then extends the discussion to regional financial arrangements, focusing on the experience of the European Union and its lessons for other regional financial development initiatives.

SUPPORTING FINANCIAL DEVELOPMENT

Countries may consider a variety of models for domestic financial development. In order to approach this subject properly, one should have an understanding of five interrelated underlying issues: (1) the importance of law and other institutions to economic development, (2) the significance of the financial sector, (3) the risks inherent in liberalization and their interaction with World Trade Organization (WTO) financial services commitments, (4) the role of regulation in reducing the risks of liberalization while achieving the goals development and stability and (5) the importance of appropriate legal and institutional design to the financial sector.