This volume summarizes the key lessons of financial history for emerging markets and developing economies today, including the rise and role of central banks, debates on how to make banking secure and sound, the relative efficiency of universal banking compared to the Anglo-American commercial banking model, and the role of savings banks, non-banks and securities markets in development. Two lessons that should be kept in mind in reforming financial systems are the importance of incentives and diversification. Robust financial systems require incentive systems that reward prudent risk-taking and encourage sound portfolio diversification. In addition, reputation has proved to be important: central bankers must demonstrate anew why they have earned a reputation for non-inflationary policies, and private intermediaries must similarly demonstrate again why they have earned a reputation for sound, as opposed to Ponzi, finance. Attempts to reform financial systems without due allowance for the time and effort to develop institutions, including reputation, are likely to prove short-lived.

This volume summarizes the key lessons of financial history for emerging markets and developing economies today, including the rise and role of central banks, debates on how to make banking secure and sound, the relative efficiency of universal banking compared to the Anglo-American commercial banking model, and the role of savings banks, non-banks and securities markets in development. Two lessons that should be kept in mind in reforming financial systems are the importance of incentives and diversification. Robust financial systems require incentive systems that reward prudent risk-taking and encourage sound portfolio diversification. In addition, reputation has proved to be important: central bankers must demonstrate anew why they have earned a reputation for non-inflationary policies, and private intermediaries must similarly demonstrate again why they have earned a reputation for sound, as opposed to Ponzi, finance. Attempts to reform financial systems without due allowance for the time and effort to develop institutions, including reputation, are likely to prove short-lived.

Increasing longevity, globalized competition, and market fluidity have created a new landscape for the development of retirement products. Complete reliance on traditional social security systems and defined benefit pensions is no longer an alternative in emerging economies. The development of defined contribution pension systems during both the accumulation and the payout phases has been attracting attention from policy makers, who realize that valuable lessons can be gleaned from the experiences of countries that are ahead in the reform process. Many countries that have implemented systemic pension reforms and introduced private pension systems are now facing the challenge of organizing the payout phase for retiring workers. This effort entails introducing a well-regulated and well- supervised market for retirement products, including marketing activities, providers, and intermediaries. However, in-depth analysis of the related policy issues, constraints, and options is rare. The literature on the payout phase is narrowly focused on a few countries, mainly the United Kingdom and the United States, and it does not address in sufficient detail the institutional and regulatory issues faced by policy makers in reforming countries. Annuities and Other Retirement Products: Designing the Payout Phase aims to fill the gap in the literature. The book initially focuses on the policy issues and constraints confronting the design of the payout phase and examines risk factors for both pensioners and providers. It then scrutinizes the pension systems of five representative countries - Australia, Chile, Denmark, Sweden, and Switzerland - which provide a rich variety of experiences and policy lessons applicable to other reforming countries. The five study countries have large mandatory or quasi-mandatory private pension systems operating primarily on a defined contribution basis, and they have already entered the payout phase. A comparative analysis of the similarities and differences between the systems in these countries rounds out the investigation.

The dramatic events of the late 1990s brought the issue of financial sector policy in developing countries to the forefront. Much of the international community's policy focuses on financial sector reform including strengthening the prudential regulations and supervision of the financial system along with ensuring that finance can make its most important contribution to economic prosperity through market-driven allocation of investable resources. This book consists of a collection of essays concentrating on financial sector policy issues effecting developing countries. Drawing on the accumulated experience of its contributors, this book provides an understanding of the structure and dynamics of this sector.