Description

This paper assesses the measures taken to resolve the recent banking crises in Indonesia and draws lessons for the future. Indonesia’s banking crisis was the most severe in EastAsia and one of the most costly crises the last quarter of the 20th century. The crisis resolution suffered from two main problems: (i) a lack of understanding from the IMF and on the part of the authorities of the crisis which resulted in inappropriate strategies both
at the macro and micro level; and (ii) a lack of government commitment to take consistent and objective measures. To be effective, the resolution process should be carried out objectively, transparently, and consistently in order to restore the health of the financial system and the economy.