asian crisis

greater transparency and accountability in government and corporate affairs;

stronger banking systems that protect the savings of small depositors-and that must be freed from government intervention in the allocation of credit so that they can channel it not just to a favored few, but to those who will use it productively;

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the liberalization of capital flows in a prudent and properly sequenced way that will maximize the benefits and minimize the risks of free capital movements;

a more level playing field for the private sector-by dismantling monopolies and setting up simpler, more transparent regulatory systems;

reductions in unproductive government spending, such as military build-ups, prestige projects, and subsidies and guarantees to favored sectors and firms; and

higher and more cost-effective spending on primary health care and education; adequate social protection of the poor, the unemployed, and other vulnerable groups; and environmental protection; and

a more effective dialogue with labor and the rest of civil society-to increase political support for adjustment and reform and to ensure that all segments of society benefit from the resumption of growth, while core labor rights are protected.
Looking Ahead

How can these lessons be used to help prevent financial crises and resolve those that still inevitably occur? The IMF's Interim Committee is calling for action in four critical areas:

First, strengthen international and domestic financial systems. Over the past year or so, the IMF and World Bank have been working together to help disseminate a set of best practices in the banking areas-as developed by the Basle Committee on Banking Supervision-so that standards and practices that have worked well in some countries can be adapted and applied in others. The standards are codified in the Committee's 25 core principles. These efforts must now be stepped up and broadened to cover other important areas, suc…

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