At the time of the 1997 Asian crisis, Indonesia's financial sector had serious weaknesses. This made it vulnerable to the key element of the crisis: massive reversal of foreign capital flows. Despite huge expenditures on restructuring, many of these weaknesses remain and the current strategy...

This paper examines monetary policy during the Indonesian crisis, looking in particular at what should have been the proper focus of policy. Both the exchange rate and money base have been suggested as appropriate policy objectives, but it is argued here that neither provides adequate policy...

Given the strong performance and resilience of the Indonesian economy over the previous three decades, the depth and duration of the 1997-98 crisis was unexpected. The IMF's initial policy prescription was in keeping with the nature of the crisis—characterised by a reversal of foreign capital...