East Asia, the International Financial Institutions and Regional Regulatory Reform

In the wake of the economic and political crises that gripped parts of East Asia from 1997 onwards, much attention was given to the possible reform of the region's distinctive political practices and economic structures. Especially prominent in this debate were key international financial institutions (IFIs) like the International Monetary Fund, the World Bank and - more subtly - the US Treasury Department. Yet many observers claimed that the IFIs themselves were in need of reform, as was the international financial architecture they helped create and manage. Significantly, however, no serious attempt has been made to reform the international financial system despite concern about its impact on the region generally and during the crisis in particular. This paper reviews the central issues in the debate over financial sector reforms, and argues that while further liberalization continues to be urged upon East Asia, substantial reform of the IFIs or the international financial sector is unlikely given existent patterns of political and economic interests, despite continuing doubts about their benefits.