A Practical Guide to Managing Systemic Financial Crises : A Review of Approaches Taken in Indonesia, The Republic of Korea, and Thailand
The author examines experiences in Indonesia, the Republic of Korea, and Thailand in confronting systemic financial crises during the 1990s. He draws on the knowledge and experience of World Bank staff who managed the Bank's financial and tech...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2002/05/1798584/practical-guide-managing-systemic-financial-crises-review-approaches-taken-indonesia-republic-korea-thailand http://hdl.handle.net/10986/14797 |
| Summary: | The author examines experiences in
Indonesia, the Republic of Korea, and Thailand in
confronting systemic financial crises during the 1990s. He
draws on the knowledge and experience of World Bank staff
who managed the Bank's financial and technical
assistance to those countries. In reviewing the principal
actions taken by the governments to resolve the crises, the
author describes key challenges that governments face in
tackling crises, defines basic guidelines and principles for
responding to those challenges, and proposes steps to
improve the ability of governments to deal with crises when
they do occur, as well as to mitigate the risk of crises in
the first place. The author addresses matters such as the
provision of liquidity, institutional arrangements for
crisis resolution, use of public funds, diagnosis of
problems, resolution, recapitalization, restructuring of
banks, privatization of banks, restructuring of troubled
debt, and use of asset management companies. He goes on to
develop the conceptual underpinnings for two fundamental
improvements in crisis management practices, one to develop
an explicit, comprehensive crisis resolution strategy, and
the second to link the provision of support to banks
explicitly to the actual outcomes of troubled debt
restructuring. A common theme in both is to maximize the
impact of public funds used in crisis resolution. Finally
the author identifies steps that governments can take to
mitigate the risk of crisis and be better prepared to deal
with shocks should they occur, including the use of
contingency planning in the context of liquidity management
and intervention in weak banks. |
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