JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.

A decade after the darkest moments of the financial crisis, both the US financial system and the legal framework for its regulation are still in flux. The post-crisis regulatory framework has made systemically important banks much more resilient. They are substantially better capitalized and less dependent on runnable short-term funding. But the current regulatory framework does not deal effectively with threats to financial stability outside the perimeter of regulated banking organizations, notably from forms of shadow banking. Moreover, with the political tide having for the moment turned decisively toward deregulation, there is some question whether the resiliency improvements of the largest banks will be preserved. This article assesses the accomplishments, unfinished business, and outstanding issues in the post-crisis approach to prudential regulation.

AT ITS SEMIANNUAL MEETING in April 1997 the Interim Committee of the International Monetary Fund (IMF) proposed that the organization's Articles of Agreement (the basic "constitution" of international financial relations among its 182 member countries) be amended to include currency convertibility for capital transactions among its fundamental objectives. Since the IMF was founded in 1946, currency convertibility for current transactions-goods, services, travel, interest, and dividend paymentsenshrined in Article VIII, has been not only a fundamental objective of the organization but a condition for membership in good standing. But convertibility for capital transactions was pointedly excluded from the basic objectives; indeed, early proposals would have enjoined member countries, when requested, to help other members enforce such controls on international capital transactions as they might impose, although that provision was ultimately not adopted. Private international capital movements were badly disrupted by the extensive debt defaults of the 1930s and the ravages of World War II. Since the 1940s, however, they have grown rapidly, regaining the importance in international transactions that they had before World War I and in the 1920s. The world of international economic intercourse is thus very different today from that envisaged by the architects of the IMF. Shortly after the Interim Committee's meeting, the Asian financial crises erupted. Some observers attributed these crises in part to unwise or excessive capital liberalization. Malaysia dramatically reimposed controls on outward capital movements in September 1998, while other countries tightened their existing controls. All these developments have made

No abstract