The Seventh Central Banking Seminar held from January 27–31, 1997, brought together central bank governors, deputy governors, and senior bank supervisors from some 40 countries representing industrial, transition, and developing economies. The present seminar was the latest in a series sponsored jointly by the Institute of the IMF and the Monetary and Exchange Affairs Department (MAE). The series provides a gathering point, roughly every two years, for the policymakers and senior practitioners who face the day-to-day challenges in formulating and implementing monetary policy to discuss their experiences and the latest research in their fields of responsibility. On some occasions, the seminar has focused on central bank issues in general; on other occasions, it has concentrated in one particular area of central bank concern. The present seminar was of the latter form. Issues of banking soundness have become so pervasive in recent years, and the lessons learned from experiences in handling them so important, that banking soundness clearly merited selection as the topic for this seminar. But the usefulness of the seminar would be much reduced if it did not focus also on the wider economic environment within which policy makers are addressing the issues of banking soundness—particularly, an environment increasingly integrated across both sectors and countries.