Evaluation Lessons of a Global

Financial Crisis for Asia and ADB
As Asia and the Pacifc recovers from the 2008–2009 global fnancial crisis, the distress
engulfng European economies is stoking fears of a new storm battering the region’s exports
and restricting fnancial resource fows. Concerned about a crisis governments in Asia are
preparing their defenses and might seek fnancial support and policy advice from ADB. This
brief discusses the potential risks to Asia from a crisis in Europe, and lessons from evaluation
on crisis response support provided by ADB and other international fnancial institutions.
The Impact and Risks of a Crisis in Europe
The impact of 2008–2009 global fnancial crisis on Asia
was much lighter than feared. But the fallout from a crisis
triggered by a country exiting the eurozone, while not a
high probability, could be more signifcant. Such an event
could change perceptions about the commitment of other
countries to the euro. And this in turn could severely reduce
economic growth in Europe and increase uncertainty on
global fnancial markets that could encourage a fight of
capital to US dollars. This study contends that the ongoing
slowdown in the Asian economies would be severely
aggravated by a crisis in Europe. Indeed, countries might
fnd it harder to cope with a sharp economic downturn in
Europe than with a prolonged slowdown. At least the latter
scenario would provide Asia’s exporters some time to fnd
alternative markets.
Just as in the 2008–2009 global fnancial and economic crisis,
trade would be the main route of transmission. Bangladesh,
Sri Lanka, Thailand, and Viet Nam are seen as particularly
vulnerable due to their larger dependence on European
markets. But even for the less dependent, the risks of a full-
blown economic crisis in Europe are not negligible. Risks
would also be high for mineral exporters if an ensuing global
recession cut commodity prices. Here, Armenia, Azerbaijan,
Georgia, Kazakhstan, Mongolia and Papua New Guinea
would be vulnerable. As would tourism and remittance-
dependent economies such as Cambodia, the Kyrgyz
Republic, Mongolia, Tajikistan, Thailand, Timor-Leste,
Viet Nam and some of the small island economies of ADB’s
Pacifc developing member countries.
The impact on the fnancial sectors of several Asian countries
could be signifcant if there were a fight of credit and capital
and a marked drop in exports. While low foreign ownership
and thin exposure to eurozone bonds would likely shield
banking systems in Asia’s emerging markets, the recent
increase in European banks’ exposure to fnancial institutions
in the region’s developing economies could heighten
vulnerabilities if lending to Asia is cut. The impact on poverty
in the region is likely to be moderate overall, but could be
quite severe on more vulnerable small countries, and directly
afected and vulnerable groups in larger countries.
Crisis Preparedness and Response of
Developing Countries
The extent to which a crisis in Europe would reverberate
onto ADB’s developing member countries depends not only
on their vulnerabilities, but also on the strength of their
institutions, monetary and fscal policy regimes, the health of
fnancial sectors, and the strength of social safety nets.
Macroeconomic and fnancial sector policies in Asia have
improved since the 1997 Asian fnancial crisis, bolstering
the region’s ability to cope with future emergencies. Even
during the global slowdown of 2008–2009, Asia managed
respectable economic growth, despite sharp decline in
exports. The fexibility of exchange rates has improved in
major Asian economies, particularly in the past few years.
Consequently, most emerging economies in the region now
have competitive exchange rates. Asian countries have also
slowed the transition to open capital accounts, thereby
insulating their exchange rates and economies from volatile
July 2012
Learning Lessons
Evaluation
Independent
capital fows. Most countries in the region have built up
substantial foreign exchange reserves. Regulation of the
banking and corporate sectors has improved, and risk-
weighted capital adequacy ratios have increased in most
countries. What is more, the short-term external borrowing
that generated substantial currency and maturity mismatches
in the 1990s have been reduced, and asset diversifcation has
helped reduce fnancial market risk. Even so, there remains
considerable scope for strengthening Asia’s fnancial systems,
particularly in transition countries in Central Asia.
On the economic front, infation in most economies had been
contained since the Asian fnancial crisis. As the global crisis
unfolded, several Asian countries cut policy rates sharply
in the second half of 2008 to ease liquidity. Pressure on
consumer prices did emerge in some countries, but infation
rates by early 2012 had eased to pre-crisis levels. Thus, some
countries have the scope for easing liquidity in the event of
another fnancial crisis—and might consider easing cash-
reserve ratios and interest rates to encourage bank lending to
stimulate their economies.
Fiscal defcits have fallen in much of the Asian region,
providing the space to mount credible expansionary fscal
responses to the 2008–2009 crisis (see Table 1). Although
many countries in the region have the fscal latitude to
pursue expansionary policies in the event of a crisis in Europe,
the high level of government defcits present a dilemma
for policymakers in Asia. High defcits could undermine
confdence, while a signifcant fscal contraction at this
point could worsen the impact of negative shocks from the
global economy. This puts a premium on macroeconomic
sustainability and the quality of public expenditure in
countercyclical fscal packages. To safeguard development
goals, countercyclical spending should be reversible,
especially for consumption-type spending, and yield
productivity gains in investment expenditure on human
and physical capital.
A high degree of international cooperation across regions and
within Asia was the hallmark of the response to the 2008–
2009 global fnancial crisis. A similar coordinated efort will be
needed to stem any serious contagion from a European crisis.
Asian countries will be expected to participate in such an
efort. One potential area of cooperation would be to push for
greater international cooperation on corporate and banking
sector regulation to accommodate emerging Asia’s needs.
Collective action by Asia’s developing countries could reduce
the impact of a global crisis on the region. The rapid growth
of Asia’s larger emerging economies and greater fnancial
integration underlines the importance of, and potential for,
the region to play a larger role in helping prevent global crises.
The eurozone crisis has vividly highlighted the dangers
inherent in fxed exchange rate systems among disparate
economies. Compared to Europe, Asian countries are far more
diverse in their income levels, fnancial systems, and legal and
political structures. Such diversity imposes severe limitations
on treaties and institutional arrangements to promote
monetary integration. The volatile global environment
underlines the merit of Asian countries retaining exchange
rate fexibility and independent monetary policies.
Lessons on Responses to Crises for ADB and
Developing Countries
Evaluations of the responses to the 2008–2009 global fnancial
crisis by ADB and other international fnancial institutions
provide valuable lessons. Box 1 highlights how the future
responses by developing countries, ADB and international
fnancial institutions, and the evaluation community could be
more efective.
Country-level Support
Stay prepared to respond to crises. Developing Asia coped
well with the recent global crisis, mainly because it was
better prepared by learning crucial lessons from the Asian
fnancial crisis. This time around, countries had adequate
fscal space, pursued rational exchange rate policies, and
improved banking sector regulation. ADB was also better
prepared institutionally, with improved staf knowledge, and
quick disbursing instruments. ADB was, however, somewhat
handicapped because the needed capital headroom was
2005–07 2008 2009 2010 2011
Severely afected -0.1 -2.2 -4.3 -3.8 -4.6
Moderately afected -1.7 -2.9 -4.7 -3.7 -3.4
Least afected -0.4 -0.4 -1.2 -1.5 -1.6
High income -1.7 -1.3 -6.5 -5.9 -6.4
GDP = gross domestic product; regional averages are GDP weighted
Source: World Bank data
Table 1: Government stimulus 2005–2011 (average annual government defcit (% of GDP)
Learning Lessons
not available in a timely manner. The managements and
shareholders of international fnancial institutions need to
be aware of the additional resource needs of crisis response
operations and the trade-of between the goals of maximizing
resource fows to developing countries during normal times
and maintaining sufcient capital headroom so that lending
can be ramped up during a crisis.
Countercyclical fscal policy—focus on sustainability
and timely impact. A successful countercyclical fscal policy
needs to focus on three important factors—macroeconomic
sustainability, quality of spending, and timeliness. Both
ADB and its developing member countries need to pay
attention to whether the fscal expansion required to
respond to a crisis is consistent with macroeconomic stability
over the medium-term. The quality of spending is critical.
Incremental public spending that supports consumption
should be reversible, and investment expenditures should
focus on ongoing investment projects with high short-
term employment impacts. Relying on capital-intensive
investment projects with long startup periods can delay the
impact of stimulus packages. In contrast, supporting labor-
intensive investments, enhanced maintenance of existing
infrastructure, and scaling up social protection expenditure
can all help in infusing liquidity into the system faster and
have more immediate impacts.
Build and nurture reliable and strong social protection
systems during non-crisis periods. Social protection
systems are vital for coping with crises, and well-functioning
systems can be scaled up or down as needed. Reliable social
protection systems mean that governments can reach
out efectively to the vulnerable and disburse assistance
fast. However, the performances of many existing safety
net programs are being undermined by poor targeting,
waste, and other forms of leakage due to mismanagement.
Given the time needed to set up efective social protection
systems, it is essential to address these issues before
rather than after a crisis. ADB, in coordination with other
agencies, could help developing member countries build
comprehensive and well-targeted social protection systems
that factor in budget constraints, administrative feasibility,
and political economy considerations.
Focus on keeping the fnancial sector efcient and
strong. Countries in Asia made considerable progress
in reforming and strengthening their fnancial sectors.
However, fnancial sectors in some developing countries,
and particularly in Central Asia’s transition economies, need
further strengthening. While a crisis in Europe is unlikely to
trigger banking crises in Asia, it could create stress points
which need to be anticipated and carefully managed. ADB
and other international fnancial institutions can provide
advisory and policy-based support to Asian fnancial
institutions. Evaluation shows that crisis assistance can be
delivered faster if support is built on existing relationships
with institutions already familiar with the policies and
procedures of international fnancial institutions.
Trade fnance supported by international fnancial
institutions can play an important role during crises.
Trade fnance played a prominent role in the response of ADB
and other international fnancial institutions to the 2008–
2009 global fnancial crisis—and the size of trade fnance
programs have since been enhanced signifcantly in most
of these institutions. Evaluations found these programs to
be relevant because trade fnance dried up during the crisis.
The programs were responsive to the needs of developing
countries, because a signifcant part of the support went
to the ones that were worst hit and most in need, with
Bangladesh, Nepal, Pakistan, Sri Lanka, and Viet Nam
receiving 90% of ADB’s trade fnance support during that
time. Evaluation studies found that the high due-diligence
standards of the trade fnance programs also raised the
standards of operational efciency, disclosure, and
Box 1: Key Drivers of Crisis Response to External Shocks
For crisis response, evaluation-based lessons place the
greatest stress on preparation by developing countries,
ADB, and IED.
n For ADB’s developing member countries, the priorities
are ensuring (i) fscal sustainability through aggressive
public expenditure management; (ii) robust systems
for social protection, and targeting social protection
on vulnerable households; and (iii) sufcient capital
adequacy in the fnancial system to counter shock-
related stress.
n For ADB, the priorities are for investing in
(i) forecasting systems to better anticipate the risks
of external shocks and identify needed actions;
(ii) knowledge, resources, and instruments to support
country priorities; and (iii) relationships with clients
and partners to strengthen and speed up ADB
support.
n For IED, the priority is to pursue operational learning
through timely evaluations of ADB support, and
quickly getting the lessons out to countries and ADB
staf. This may require a strategic rebalancing of IED’s
work program, especially with respect to the mix
between project evaluations and the more thematic
evaluations.
IED = Independent Evaluation Department
Learning Lessons
governance of issuing banks. However, the impact of trade
fnance programs in terms of their additionality, possible
crowding out of private sector resources, pricing, proftability,
and appropriate scaling-up during crises and scaling-back
afterwards needs to be evaluated. This could be done jointly
with the other international fnancial institutions involved in
trade fnance programs with common features to beneft from
mutual learning.
ADB’s Institutional Preparedness
In-depth country and sector knowledge is a prerequisite
for mounting an efective crisis response program.
ADB and other international fnancial institutions will beneft
from improving coordination of resources and knowledge
sharing. This and the presence of so-called “silo behavior”
(behavior based on a narrow-minded view on policy)
could weaken the crisis response of international fnancial
institutions and aggravate the difculties involved in learning
from macroeconomic and fnancial developments and cross-
country experiences.
Partnership approach to crisis response will be more
efective. Compared to the Asian fnancial crisis, coordination
among international fnancial institutions within Asia and
in other regions, was better during the 2008–2009 crisis. An
efective division of labor among these institutions based
on each one’s comparative advantages and expertise, and
with good communication and information sharing, would
signifcantly improve the planning and execution of crisis
support.
Timely availability of adequate resources is critical for
efective crisis response. ADB’s capacity to respond to a
crisis depends on the availability of capital to support a rapid
increase in lending. But this may result in a trade-of between
crisis response operations and its normal lending operations
unless its risk-bearing capacity is augmented. Allocation
of resources for crisis response and normal operations is a
strategic issue for ADB’s shareholders and its Board to consider
in determining the level of support. A better assessment of
the vulnerabilities of developing countries to economic and
fnancial crises, and their ability to deal with them, could
improve the targeting of ADB support to those most in need
during a crisis.
Choice of instruments matters for efective response.
The timely disbursement of resources and ensuring positive
net resource transfers are critical for an efective crisis
response. Typical slow-disbursing investment lending would
therefore be inapt for crisis-support. Regular high-quality
policy-based quick disbursing loans are appropriate for crisis
support, but they tend to exhaust the capital headroom over
longer periods. Special crisis response vehicles, such as ADB’s
countercyclical support facility and special program lending
facility are appropriate instruments during crises as they have
shorter repayment periods and ofer greater fexibility to
institutions for designing support. Crisis-response instruments
also minimize the trade-of with normal lending. Such
instruments must also meet the special crisis-related loan
fnancing needs of poorer countries eligible for ADB support
on concessional terms.
Surveillance is key to a timely crisis response. Efective
surveillance provides vital early warnings on impending
shocks to fnancial systems and helps develop crisis responses.
However, surveillance is a complex business. It needs to be
managed professionally and, crucially, be devoid of political
and ideological infuences. To be efective, surveillance must
provide timely information on looming problems to ADB’s
management and policymakers.
Learning Lessons is a synthesis of key evaluative lessons drawn
from the experience of ADB operations and non-ADB sources.
Lessons presented in this brief are not prescriptive, and users are
advised to carefully review these lessons in the context of country,
sector, and thematic conditions.

Contact Us
Independent Evaluation Department
Asian Development Bank
6 ADB Avenue, Mandaluyong City
1550 Metro Manila, Philippines
Tel +63 2 632 4100
Fax +63 2 636 2161
www.adb.org/evaluation
evaluation@adb.org
Written by Joanne Salop and Vankina Tulasidhar under the guidance of Vinod
Thomas, Director General, Independent Evaluation.
Disclaimer
The views and assessments contained herein do not necessarily reflect the
views of the Asian Development Bank (ADB) or its Board of Directors or the
governments they represent. ADB does not guarantee the accuracy of the
data and accepts no responsibility for any consequence of their use.
About the Independent Evaluation at Asian Development Bank
The Independent Evaluation Department evaluates the policies, strategies,
operations, and special concerns of the Asian Development Bank
relating to organizational and operational effectiveness. It contributes to
development effectiveness by providing feedback on performance and
through evaluation lessons.
Learning Lessons

A similar coordinated effort will be needed to stem any serious contagion from a European crisis.3 -4. with improved staff knowledge. Asian countries are far more diverse in their income levels. Developing Asia coped well with the recent global crisis. High deficits could undermine confidence. financial systems. and riskweighted capital adequacy ratios have increased in most countries.Learning Lessons capital flows. Thus. Compared to Europe. and yield productivity gains in investment expenditure on human and physical capital.5 2010 -3. regional averages are GDP weighted Source: World Bank data . Asian countries will be expected to participate in such an effort. and quick disbursing instruments.6 -6. Regulation of the banking and corporate sectors has improved.4 GDP = gross domestic product. On the economic front.6 -3. especially for consumption-type spending. The eurozone crisis has vividly highlighted the dangers inherent in fixed exchange rate systems among disparate economies. but inflation rates by early 2012 had eased to pre-crisis levels. Although many countries in the region have the fiscal latitude to pursue expansionary policies in the event of a crisis in Europe. This time around.9 -0. some countries have the scope for easing liquidity in the event of another financial crisis—and might consider easing cashreserve ratios and interest rates to encourage bank lending to stimulate their economies. while a significant fiscal contraction at this point could worsen the impact of negative shocks from the global economy. Collective action by Asia’s developing countries could reduce the impact of a global crisis on the region. and asset diversification has helped reduce financial market risk. The rapid growth of Asia’s larger emerging economies and greater financial integration underlines the importance of. there remains considerable scope for strengthening Asia’s financial systems. the high level of government deficits present a dilemma for policymakers in Asia. the region to play a larger role in helping prevent global crises. Most countries in the region have built up substantial foreign exchange reserves.4 -1.9 2011 -4. One potential area of cooperation would be to push for greater international cooperation on corporate and banking sector regulation to accommodate emerging Asia’s needs. and the evaluation community could be more effective. the short-term external borrowing that generated substantial currency and maturity mismatches in the 1990s have been reduced.4 -1.2 -6. Lessons on Responses to Crises for ADB and Developing Countries Evaluations of the responses to the 2008–2009 global financial crisis by ADB and other international financial institutions provide valuable lessons. The volatile global environment underlines the merit of Asian countries retaining exchange rate flexibility and independent monetary policies. ADB was also better prepared institutionally.7 -0.7 -1. As the global crisis unfolded. ADB was. however. To safeguard development goals. mainly because it was better prepared by learning crucial lessons from the Asian financial crisis. somewhat handicapped because the needed capital headroom was Table 1: Government stimulus 2005–2011 (average annual government deficit (% of GDP) 2005–07 Severely affected Moderately affected Least affected High income -0. ADB and international financial institutions.7 2008 -2.2 -2.8 -3. This puts a premium on macroeconomic sustainability and the quality of public expenditure in countercyclical fiscal packages. inflation in most economies had been contained since the Asian financial crisis.4 -1. Such diversity imposes severe limitations on treaties and institutional arrangements to promote monetary integration. countercyclical spending should be reversible. Box 1 highlights how the future responses by developing countries. pursued rational exchange rate policies.5 -5. particularly in transition countries in Central Asia. Fiscal deficits have fallen in much of the Asian region.7 -1. Even so. A high degree of international cooperation across regions and within Asia was the hallmark of the response to the 2008– 2009 global financial crisis. and potential for. and improved banking sector regulation. and legal and political structures.3 2009 -4. Country-level Support Stay prepared to respond to crises.1 -1. several Asian countries cut policy rates sharply in the second half of 2008 to ease liquidity. What is more. providing the space to mount credible expansionary fiscal responses to the 2008–2009 crisis (see Table 1). countries had adequate fiscal space. Pressure on consumer prices did emerge in some countries.

and IED. waste. For ADB. ADB. and targeting social protection on vulnerable households. administrative feasibility. Incremental public spending that supports consumption should be reversible. and (iii) relationships with clients and partners to strengthen and speed up ADB support. it could create stress points which need to be anticipated and carefully managed. This may require a strategic rebalancing of IED’s work program. need further strengthening. and instruments to support country priorities. Given the time needed to set up effective social protection systems. evaluation-based lessons place the greatest stress on preparation by developing countries. Both ADB and its developing member countries need to pay attention to whether the fiscal expansion required to respond to a crisis is consistent with macroeconomic stability over the medium-term. financial sectors in some developing countries. While a crisis in Europe is unlikely to trigger banking crises in Asia. Nepal. it is essential to address these issues before rather than after a crisis. Focus on keeping the financial sector efficient and strong. Build and nurture reliable and strong social protection systems during non-crisis periods. Evaluation shows that crisis assistance can be delivered faster if support is built on existing relationships with institutions already familiar with the policies and procedures of international financial institutions. quality of spending. n For ADB’s developing member countries.not available in a timely manner. supporting laborintensive investments. For IED. Evaluation studies found that the high due-diligence standards of the trade finance programs also raised the standards of operational efficiency. and Viet Nam receiving 90% of ADB’s trade finance support during that time. enhanced maintenance of existing infrastructure. and Learning Lessons . Trade finance played a prominent role in the response of ADB and other international financial institutions to the 2008– 2009 global financial crisis—and the size of trade finance programs have since been enhanced significantly in most of these institutions. Countries in Asia made considerable progress in reforming and strengthening their financial sectors. The quality of spending is critical. ADB. (ii) robust systems for social protection. However. The programs were responsive to the needs of developing countries. ADB and other international financial institutions can provide Box 1: Key Drivers of Crisis Response to External Shocks For crisis response. in coordination with other agencies. the priorities are ensuring (i) fiscal sustainability through aggressive public expenditure management. (ii) knowledge. Relying on capital-intensive investment projects with long startup periods can delay the impact of stimulus packages. Social protection systems are vital for coping with crises. because a significant part of the support went to the ones that were worst hit and most in need. and well-functioning systems can be scaled up or down as needed. and timeliness. and investment expenditures should focus on ongoing investment projects with high shortterm employment impacts. n n IED = Independent Evaluation Department advisory and policy-based support to Asian financial institutions. and political economy considerations. and scaling up social protection expenditure can all help in infusing liquidity into the system faster and have more immediate impacts. Reliable social protection systems mean that governments can reach out effectively to the vulnerable and disburse assistance fast. Trade finance supported by international financial institutions can play an important role during crises. and other forms of leakage due to mismanagement. the performances of many existing safety net programs are being undermined by poor targeting. and (iii) sufficient capital adequacy in the financial system to counter shockrelated stress. In contrast. Sri Lanka. The managements and shareholders of international financial institutions need to be aware of the additional resource needs of crisis response operations and the trade-off between the goals of maximizing resource flows to developing countries during normal times and maintaining sufficient capital headroom so that lending can be ramped up during a crisis. resources. Evaluations found these programs to be relevant because trade finance dried up during the crisis. could help developing member countries build comprehensive and well-targeted social protection systems that factor in budget constraints. the priorities are for investing in (i) forecasting systems to better anticipate the risks of external shocks and identify needed actions. and quickly getting the lessons out to countries and ADB staff. A successful countercyclical fiscal policy needs to focus on three important factors—macroeconomic sustainability. However. with Bangladesh. and particularly in Central Asia’s transition economies. disclosure. Countercyclical fiscal policy—focus on sustainability and timely impact. Pakistan. especially with respect to the mix between project evaluations and the more thematic evaluations. the priority is to pursue operational learning through timely evaluations of ADB support.

surveillance must provide timely information on looming problems to ADB’s management and policymakers. possible crowding out of private sector resources. A better assessment of the vulnerabilities of developing countries to economic and financial crises. sector. Typical slow-disbursing investment lending would therefore be inapt for crisis-support. Compared to the Asian financial crisis. strategies.adb. Special crisis response vehicles. the impact of trade finance programs in terms of their additionality. and appropriate scaling-up during crises and scaling-back afterwards needs to be evaluated. Learning Lessons is a synthesis of key evaluative lessons drawn from the experience of ADB operations and non-ADB sources. Contact Us Independent Evaluation Department Asian Development Bank 6 ADB Avenue. Lessons presented in this brief are not prescriptive. but they tend to exhaust the capital headroom over longer periods. Regular high-quality policy-based quick disbursing loans are appropriate for crisis support. ADB’s capacity to respond to a crisis depends on the availability of capital to support a rapid increase in lending.org . crisis response operations and its normal lending operations unless its risk-bearing capacity is augmented. This could be done jointly with the other international financial institutions involved in trade finance programs with common features to benefit from mutual learning. To be effective. However. could improve the targeting of ADB support to those most in need during a crisis. Surveillance is key to a timely crisis response. surveillance is a complex business. and special concerns of the Asian Development Bank relating to organizational and operational effectiveness. However. Timely availability of adequate resources is critical for effective crisis response. and thematic conditions. ADB and other international financial institutions will benefit from improving coordination of resources and knowledge sharing. be devoid of political and ideological influences. Such instruments must also meet the special crisis-related loan financing needs of poorer countries eligible for ADB support on concessional terms. crucially. Mandaluyong City 1550 Metro Manila. But this may result in a trade-off between Written by Joanne Salop and Vankina Tulasidhar under the guidance of Vinod Thomas. Director General. pricing. would significantly improve the planning and execution of crisis support.org/evaluation evaluation@adb. profitability. Disclaimer The views and assessments contained herein do not necessarily reflect the views of the Asian Development Bank (ADB) or its Board of Directors or the governments they represent. ADB does not guarantee the accuracy of the data and accepts no responsibility for any consequence of their use. Crisis-response instruments also minimize the trade-off with normal lending. and users are advised to carefully review these lessons in the context of country. Choice of instruments matters for effective response. An effective division of labor among these institutions based on each one’s comparative advantages and expertise. Partnership approach to crisis response will be more effective. coordination among international financial institutions within Asia and in other regions. Allocation of resources for crisis response and normal operations is a strategic issue for ADB’s shareholders and its Board to consider in determining the level of support. It contributes to development effectiveness by providing feedback on performance and through evaluation lessons. and their ability to deal with them. ADB’s Institutional Preparedness In-depth country and sector knowledge is a prerequisite for mounting an effective crisis response program. About the Independent Evaluation at Asian Development Bank The Independent Evaluation Department evaluates the policies.governance of issuing banks. Effective surveillance provides vital early warnings on impending shocks to financial systems and helps develop crisis responses. operations. Independent Evaluation. was better during the 2008–2009 crisis. This and the presence of so-called “silo behavior” (behavior based on a narrow-minded view on policy) could weaken the crisis response of international financial institutions and aggravate the difficulties involved in learning from macroeconomic and financial developments and crosscountry experiences. Philippines Tel +63 2 632 4100 Fax +63 2 636 2161 www. It needs to be managed professionally and. and with good communication and information sharing. The timely disbursement of resources and ensuring positive net resource transfers are critical for an effective crisis response. such as ADB’s countercyclical support facility and special program lending facility are appropriate instruments during crises as they have shorter repayment periods and offer greater flexibility to institutions for designing support.

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