Over the past two decades the operation of international financial markets can be aptly described by three unhappy words - volatility, contagion, and inefficiency. These woes have deepened throughout the 1990s. It is time to do something about them. Our recent report(1), based on a long-term study of the markets, recommends the establishment of a World Financial Authority as a step in the right direction. To see why such an authority is needed, what it should do, and how it can be established, it is necessary to examine how international finance arrived at this sorry state.