Leading world banks have called upon financial authorities in emerging markets to meet periodically with foreign creditors to avert panic flights of capital.

William R. Rhodes, vice chairman of Citigroup, said the proposal and others aimed at strengthening risk management and financial reform in emerging markets represented "a new architecture for crisis prevention."

The proposals, drafted by the Institute for International Finance, were unveiled by Mr. Rhodes and Charles Dallara, managing director of the Institute, at a press briefing in New York Tuesday.

The Institute, a Washington think tank, represents some 300 financial institutions worldwide, mostly commercial banks.

The proposals were presented as investors show signs of regaining confidence in emerging markets. Confidence was dented by a severe financial crisis that began in Asia two years ago and subsequently spread to Russia and Brazil.

Mr. Rhodes, however, warned that banks and foreign investors are increasingly differentiating between countries pursuing sound economic policies and those that are not.

"Two years ago I warned about the danger of excess liquidity sloshing around the world," Mr. Rhodes said. "Today, I don't see large pockets of liquidity around anymore for emerging markets."

According to data compiled by the Institute, private capital flows into emerging markets have fallen from $327 billion in 1997 to a projected $140 billion this year.

"Confidence remains fragile, and flows to emerging markets remain muted," the Institute said in its policy paper.

Although countries like Romania and Pakistan are still struggling to attract foreign capital, others such as South Korea and Brazil are on the rebound. Net capital flows into South Korea, for example, are projected to reach $7 billion this year after falling by $12 billion in both 1998 and 1997.

In a further sign of renewal, Citigroup said two weeks ago it plans to increase its short-term interbank and trade finance lines to Brazil by $200 million, to $1.3 billion.

Institute officials noted that in contrast to the past when most capital going into emerging markets was either bank loans or bonds, most of today's investing is equity.

"What we're saying is that emerging market countries need to have investor relation officers the same way that corporations have them," said Lex Rieffel, director and senior adviser of the Institute.

Institute officials raised the possibility that banks might set up contingency facilities similar to those already established for Mexico and Argentina. But they also warned that the cost of such a facility to a country experiencing a financial crisis could be prohibitive.

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