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Finance & Development    MARCH 1996
Volume 33, Number 1
Banking and Monetary Reform

Payment System Reforms and Monetary Policy
Tom�s J.T. Bali�o, Omotunde E.G. Johnson, and V. Sundararajan
The design of payment systems has important implications for the conduct of monetary policy, the soundness of financial firms, and the functioning of the economy as a whole.

Stock Markets: A Spur to Economic Growth
Ross Levine
World stock markets are booming and stock markets in developing countries account for a disproportionately large share of this boom. Investors are venturing into the world's newest markets and some are seeing handsome returns. But are developing countries themselves reaping any benefits from their stock markets? The evidence indicates that they are.

The Emerging East Asian Bond Market
Ismail Dalla and Deena Khatkhate
The rapid growth of East Asia's bond markets mirrors the region's spectacular economic development. East Asian bond markets are projected to thrive over the next decade, reflecting continued strong private sector growth and deepening financial reforms.

Adopting Indirect Instruments of Monetary Policy
William E. Alexander, Tom�s J.T. Bali�o, and Charles Enoch
In the late 1970s, industrial countries began moving toward full reliance on indirect instruments, such as open market operations, rediscount facilities, and reserve requirements. Many developing and transition economies have followed suit. Indirect instruments are more effective than direct instruments in today's increasingly open economic environment.

Financial Sector Reforms in China
Hassanali Mehran and Marc Quintyn
China's financial reform—an integral part of its transition to a market economy—has been characterized by pragmatism and gradualism. During the first decade of reforms, policymakers have emphasized institutional development, with the result that real market development has lagged behind.

The Tequila Effect and Argentina's Banking Reform
Mauricio Carrizosa, Danny M. Leipziger, and Hemant Shah
The disruption of Mexico's economy in late 1994 triggered a confidence crisis in Argentina that accelerated the restructuring of the banking sector. The restructuring process has involved the privatization of provincial banks, consolidation of private banks, and selective bank liquidations. It represents an important milestone in Argentina's long struggle to strengthen its banking system.

Global Economic Prospects and the Developing Countries

Globalization: New Opportunities, Tough Challenges
Zia Qureshi
Greater integration of developing countries into the global economy will present some difficult challenges but is well worth pursuing. Industrial and developing countries alike stand to gain significantly.

The Impact of the Internationalization of Services on Developing Countries
Carlos A. Primo Braga
Advances in information technology have vastly expanded the range of services that can be traded internationally. Developing countries stand to benefit on two fronts—they will be able to increase their exports of services and they will gain access to services not available domestically—provided they reform the regulatory environment and develop the necessary human and physical capital.

Reverse Linkages: The Growing Importance of Developing Countries
Swati R. Ghosh
As trade between developing and industrial countries grows and cross-border capital mobility increases, the developing countries will have a greater impact on the global economy. Although public debate has focused on possible adverse effects on the industrial economies, analysis suggests that the latter will benefit from growing integration.

Also in this Issue

Exchange Rate Regimes as Inflation Anchors
Peter J. Quirk
Are fixed exchange rate regimes more effective in inflation-fighting programs than flexible regimes? The answer is elusive. The operational differences between the two types of regimes have narrowed, and the relationship between choice of regime and macroeconomic performance has proven hard to assess empirically.

Growth and Financial Stability in the Middle East and North Africa
Jean-Pierre Chauffour, Sena Eken, Mohamed A. El-Erian, and Susan Fennell
This is a particularly opportune time for countries in the Middle East and North Africa to implement reforms to fulfill their considerable economic potential and reap the benefits of greater globalization and integration.

Regional Economic Growth and Convergence in India
Paul Cashin and Ratna Sahay
While per capita incomes in the states of India are quite diverse, they have been slowly converging in recent decades. Conver-gence has been aided by grants from the central government to the states; however, the contribution of internal migration to this process appears minimal.


Letter from the Editor

World Economy in Transition
Emerging Stock Markets in 1995: Decline Followed by Year-End Upturn
Graeme Littler and Ziad Maalouf



Financial Regulation in the Global Economy by Richard J. Herring and Robert E. Litan
reviewed by Warren Coats

International Debt Reexamined by William R. Cline
reviewed by Martin Cerisola

How Many People Can the Earth Support? by Joel E. Cohen
reviewed by Lant Pritchett

Environment and Resource Policies for the World Economy by Richard N. Cooper
reviewed by Michael Cohen

The Effects of Taxation on Multinational Corporations and Taxing Multinational Corporations both edited by Martin Feldstein, James R. Hines, Jr., and R. Glen Hubbard
reviewed by Enil M. Sunley