III Development of the Financial Sector
Author:
Mr. Guillermo Calvo https://isni.org/isni/0000000404811396 International Monetary Fund

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,
Mr. Eduardo Borensztein
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Mr. Paul R Masson
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Mr. Manmohan S. Kumar
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Abstract

This section describes the prereform financial system in the PCPEs and discusses the main reforms these countries have instituted to date in the banking sector. As a result of the reforms, the central banks have divested themselves of their commercial banking operations and instituted a “two-tier” banking system. However, a large proportion of the newly instituted banks are state-owned; although financial markets—money markets, in particular—are developing, equity markets are in their infancy or are nonexistent.