Depending on its own actions as MMLR, not only will those actions affect the stability of the financial system and the effectiveness of monetary policy, but they will also endogenously influence the central bank’s own financial soundness.
The underlying cause of the crisis, however, appears to be the significant deterioration in the current account and the delays in the privatisation programme which were causing interest rates to rise from September, and more markedly from around mid-November 2000. The severe liquidity squeeze and growing bank distress was accompanied by pressure on overnight interest rates and government bond yields.