As part of the improved disclosure of policies and intentions, timely and comprehensive dissemination of the public sector’s balance sheet and income statement clearly is necessary if market turbulence is to be reduced. Such disclosure helps identify pressures or problems that might otherwise be allowed to fester. For example, more timely, continuous and comprehensive release of data on foreign exchange reserves may encourage earlier and appropriate policy action in the face of large-scale speculative pressures. Transparency is most effective when it is an established element in a clearly articulated, goal-oriented process. Sensitivity to the changing needs of the marketplace for information - both statistical and qualitative - can be developed only through an ongoing dialogue with market participants. Experience suggests that in today’s 24-hour trading environment with instantaneous access to information everywhere, authorities are well-advised to speed up their disclosure and explanation of their actions and intentions. Conclusion In closing, the recovery in Asia, and particularly Korea, is remarkable indeed, and owes much to the energy and hard work of its people, enlightened political leadership, and the substantial and focused efforts of policymakers to implement sound macroeconomic and financial policy. But the recovery is not yet complete and much remains to be done. Moreover, the rapidity and severity of the developments of the last several years, indicative of the transformation of the international financial landscape, underscore the importance to crisis prevention of ongoing vigilance and robust institutional structures, and the awareness that we can never let our guard down.

•  Fundamental improvements in bank corporate governance are critical. Just as risk management and internal control processes usually need to be thoroughly overhauled in weak institutions, more often than not, so too does management. •  Protracted forbearance to preserve the appearance of solvency is not a solution. While some degree of forbearance may be unavoidable and even appropriate under the right conditions, it is at best a temporary measure. It is critical that forbearance does not become institutionalized, but is tied directly to actions by both bankers and supervisors to address underlying problems. •  Governments are not good long-term asset managers. Prolonged government holding of impaired assets is not likely to enhance their value nor aid in the restoration of market liquidity. •  Governments are not good commercial bankers. Delayed privatization of nationalized banks always means higher future costs and usually inhibits fundamental reform. •  Government-directed lending means future fiscal losses. Similarly, efforts to stimulate credit growth by non-market forces in the context of a banking crisis at best buy additional time and usually dig a deeper hole. •  Foreign investment in domestic financial sectors can yield important benefits. Foreign direct investment in the banking sector can provide much-needed capital resources, technology and knowledge transfer, and a more diversified capital and funding base in the event of future economic instability. •  Financial sectors are only as healthy as their borrowers. Without corresponding corporate sector restructuring, financial sector rescue efforts are likely to be necessary in the future.