The global economy has entered a dangerous new phase. The recovery has weakened considerably, and downside risks have increased sharply. Strong policies are urgently needed to improve the outlook and reduce risks.
Both Dodd-Frank and the bank capital standards are classic economically driven arguments that will be judged by future performance and consequences that, unfortunately, we have no way to predict. It's like voting for a president.
In emerging markets, policymakers must act now to avoid future crises. It is important to maintain the appropriate mix of macroeconomic and prudential financial policies to deal with the challenges posed by capital inflows.