The paper discusses the pros and cons of capital account liberalization. Rather than contrasting liberalization and regulation of capital flows as irreconcilable antagonisms, we argue that capital account liberalization requires institutional and regulatory safeguards. Even though the effectiveness of specific capital controls cannot be taken for granted, we reject the view that financial globalization has deprived national policymakers of the means to protect their economies against crisis. In addition to national safeguards, we assess the chances for crisis prevention and resolution on the regional level and present options to overcome institutional deficits on the global level. We conclude that reforms of the international financial architecture can help prevent illiquidity and ensure a fair burden sharing in the case of insolvency, without aggravating moral hazard behavior of the parties involved.