Effective financial reforms will also support a smooth gradual move towards greater exchange rate flexibility for the currencies of emerging Asian countries with significant external surpluses and misaligned exchanged rates. For these countries, greater exchange rate flexibility would contribute to the adjustment of imbalances as part of the agreed policy strategy.
•  The difficulties in global interbank markets which had existed since August 2007 took a dramatic turn for the worse last month. The crisis, which had until then been largely confined to wholesale markets, spilled over into a severe loss of confidence among retail investors in financial institutions. Governments around the world have been forced to offer wide-ranging guarantees on banks’ liabilities.