Federal Reserve Board Governor Roger W. Ferguson Jr. on Wednesday sharply criticized calls to limit the global flow of capital.

"Attempting in the long run to prevent capital flows is not sustainable," Mr. Ferguson told the National Association for Business Economics.

Even short-term limits on the free flow of capital do little to help countries economically, he said.

Mr. Ferguson also rejected calls to promote greater global financial stability by establishing "target zones" for foreign currency exchange rates. Governments would enforce these zones by adjusting monetary policies.

"The scale of resources required for the authorities to move exchange rates ... can be enormous and effects in terms of exchange rates movements relatively small and transitory," he said.

To avoid economic crises, Mr. Ferguson advocated sound monetary policies, strong bankruptcy systems, robust bank supervision, and extensive disclosure of financial data.

Depositors and private creditors should be the primary regulators of banks. This market-based oversight should be "reinforced" by government regulation, he said.

"Both authorities and market participants must request and receive sufficiently accurate, timely, and relevant information on which to base their decisions," he said. "They also must have sufficient insight and expertise to evaluate it properly."

Bankruptcy rules are crucial because creditors must know how defaults by corporations will be resolved, he said. "Various plans to improve international financial rules will emerge, but they must all in my judgment include a focus on national bankruptcy codes," he said.

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