Latin American Capital Markets

PRAGMATIC ISSUES IN CAPITAL MARKET DEVELOPMENT IN EMERGING ECONOMIES 499an international standard. Investors may also be able to price risks more appropriatelyand make better investment decisions.• International standards facilitate complementarities and integration amongcountries and markets.Moreover, the status of adoption and implementation of standards, as theInternational Monetary Fund's (IMF's) Reports on the Observance of Standards andCodes indicate, constitutes useful input for the IMF in its surveillance consultationsand in the technical assistance programs of the IMF, World Bank, Inter-American DevelopmentBank, and Asian Development BankSeveral broad concerns of adopting international standards to promote capitalmarket development have also been noted.These include the following (Griffith-Jones 2000):• The employment of uniform standards assumes that "one size fits all" andmay not allow either for the fact that different countries are at differentstages of development or for the different cultural, institutional, and legaltraditions across countries. Some standards are general enough to allow forvariation at the country level, while others are more detailed, making compliancemore difficult. It is difficult to balance the need to apply standards uniformlyversus the need to apply them pragmatically and according to individualcountries' circumstances (IMF 2001).• The monitoring and adoption of international standards sometimes imposesevere administrative burdens on countries.• The assessment of different countries' adoption of international standardsmay not take into sufficient account individual countries' capacity for complianceand, hence, may mean that a country that is not fully compliant is at adisadvantage.• A central issue concerning the adoption of international standards is the paceand sequencing at which they should be instituted.There is controversy aboutwhether a voluntary, gradual approach should be adopted, whether countriesshould be held to account for nonperforming standards, and whether morerigid approaches should be employed.• People have different views as to the extent to which international financialstandards should be viewed as aspirations or diagnostic tools rather than inflexiblerequirements.Copyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub