Rising to the Challenge in Asia: A Study of Financial Markets: Volume 6 - Indonesia

Abstract

The Asian currency and financial crisis has had far-reaching effects on the regional economies and their trading partners. These effects have threatened to wash away the region’s significant social and economic advancement achieved during the preceding years of rapid growth. The crisis has also unveiled many intricate problems and challenges in macroeconomic management, banking and capital markets management, institutional capacity, and governance of the financial systems in the region. Recognizing the urgency of addressing these problems and challenges, the Economics and Development Resource Center of the Asian Development Bank undertook a regional study of financial markets in nine developing member countries: People’s Republic of China, India, Indonesia, Republic of Korea, Malaysia, Pakistan, Philippines, Thailand, and Viet Nam. The objectives of the study were to analyze and deepen the understanding of the sources of the crisis in currency and financial markets, to provide a useful basis for designing and implementing preventive measures and refocused country strategies, and to help the Bank and its member countries build robust and sustainable financial systems in the region. The study was designed, supervised, and coordinated by S. Ghon Rhee, Resident Scholar, 1997–1999. A large number of Bank staff and renowned scholars and experts contributed to this study. Regional policy issues and recommendations based on the findings of the study were discussed at the High-Level Workshop on the Asian Financial Crisis in Tokyo, on 25–26 March 1999. This workshop was hosted by the Bank, the ADB Institute, and the Institute of Fiscal and Monetary Policy of the Ministry of Finance of Japan. The present series of publications seeks to bring the research findings to a much wider audience and hopes to contribute to a better understanding of the Asian financial crisis and how its recurrence can be prevented in the future.