The danger of financial instability in developing nations is a specter "haunting" international financial regulators, Federal Reserve Vice Chairman Alice Rivlin said.

Ms. Rivlin called the danger of economic instability spreading among nations "profoundly scary" at a time when the rapid flow of capital is eroding national borders. Her comments came in a speech Monday to the Institute of International Bankers, meeting in conjunction with the International Monetary Fund/World Bank annual meeting.

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