ABSTRACT
The East Asian financial crisis of 1997–8 will go down in the history books as a defining event in the evolution of the post cold war financial order. The crisis produced financial contagion on a scale unprecedented since the collapse of Creditanstalt in 1931. It provoked a great debate about the stability of the world financial system and the appropriate role of multilateral agencies, such as the International Monetary Fund (IMF), in serving as lender of last resort. The US government has also used the powers of the IMF to impose on some East Asian countries far-reaching structural changes in regulatory policies affecting trade and investment. In the case of Indonesia, the crisis set in motion economic shocks so great that President Soeharto was forced to resign and the country is now heading for its most dramatic political transformation since the fall of President Sukarno in the mid-1960s.
