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Abstract
Financial sector reforms have been at the core of the IMF-supported programs for the Asian crisis countries. The focus was on the financial sector because (1) distress and weaknesses in the sector were widely perceived as a major cause of the crisis; (2) reestablishing banking system soundness was crucial to restoring macroeconomic stability; (3) restoring confidence in banks was essential for the return of funding into the financial system; and (4) the crisis generated demands for the authorities to address the causes of the crisis by carrying out major reforms, thus providing impetus for implementing reform that in some cases had been planned for years. In the Philippines, the structural component in the program was smaller, because major shortcomings of the financial system had been addressed earlier. Malaysia’s strategy, although different in some respects from the IMF–supported programs in the crisis countries, also had a major focus on financial sector reforms.
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