Front Matter

Front Matter

International Monetary Fund
Published Date:
March 1991
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© 1999 International Monetary Fund

Production: IMF Graphics Section

Cover design: Sanaa Elaroussi

Cover photo: Padraic Hughes

Typesetting: Joseph A. Kumar and Choon Lee

Library of Congress Cataloging-in-Publication Data

Sequencing Financial Sector Reforms: Country Experience and Issues / editors,

  • R. Barry Johnston and V. Sundarajan.
    • p. cm.
  • Includes bibliographical references.
  • ISBN 1-55775-779-8
  • 1. Fiscal policy—case studies. 2. Finance—Economic aspects—case studies.

I. Johnston, R. B. (Robert Barry) II. Sundararajan, Vasudevan.

HJ192.5.S47 1999




Price: $27.50

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Financial sector liberalization can spur economic growth and development. But reforms to liberalize the financial sector also entail risks if they are not appropriately designed and implemented. One of the central policy and operational questions for countries reforming their financial systems is how to sequence the reforms so as to maximize the benefits of liberalization and contain its risks.

This book is concerned with the analytical and operational aspects of sequencing financial sector reforms. The IMF has for a number of years provided assistance to its members on their financial sector policies and operations. Issues related to the appropriate sequencing of financial sector reforms have been a central concern in the design of the IMF’s technical assistance programs. In seeking to reach a better understanding of the factors that should be taken into account in the design of financial sector reform programs, the IMF has engaged in an ongoing research effort drawing on the practical experiences of its members. This book brings together a number of these studies.

The papers presented in this volume have been prepared over a period of nearly 10 years in the Monetary and Exchange Affairs Department (formerly the Central Banking Department) of the IMF. While the topics covered in the papers reflect some of the critical concerns that confronted technical assistance on financial sectors at the time the papers were written, the recent experiences in the Asian currency crisis countries have served to highlight again the critical role of many of these issues and of the orderly sequencing of financial sector reforms, thus underscoring their continued relevance. The papers focus on monetary control, banking and supervision issues, the macroeconomic and real sector effects of reforms, and the liberalization of the capital account. Some of the lessons drawn from the Asian economies have confirmed what had already been well illustrated during earlier experiences with financial sector reforms, such as the risks of liberalization with a weak and poorly supervised financial system; they have also served to highlight the role of appropriate management of the liberalization of the capital account. Some of the original papers have been updated to reflect more recent critical experiences in Asia.

By bringing together the papers in this volume, the objective is to make more widely available the research that has contributed to the development of approaches to the sequencing of financial sector reform, and therefore to contribute to the ongoing discussion on how best to manage and sequence such reforms. As such, the book offers policymakers and researchers a unique presentation of specific country experiences, and of the lessons that can be drawn from those experiences.

Manuel GuitiÁn

Director, 1995-1998,

Monetary and Exchange Affairs Department


A number of people have contributed directly and indirectly to this book. We wish to thank our coauthors, a number of whom assisted in updating earlier versions of the papers for inclusion in this volume.

We would particularly like to express our gratitude to the directors of the IMF’s Monetary and Exchange Affairs Department, formerly the Central Banking Department, initially Justin B. Zulu, and subsequently Manuel Guitián. The papers included in this volume reflect work that the department undertook over a nearly 10-year period, during which time the department directors consistently encouraged and supported this work.

Also to be acknowledged are our colleagues—too many to be mentioned by name—who commented on various drafts of the papers and who contributed ideas during their participation in numerous technical assistance missions and department discussions.

Special thanks go to Francine Koch and Maria Tramuttola for their excellent secretarial assistance in preparing this volume and to Natalie Baumer for her contribution in editing the manuscript. Jeff Hayden of the External Relations Department edited the final version of the volume and coordinated its production.

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