The effects were transmitted primarily through the following ways.
(i)  The sharp depreciation of the rupiah suddenly blew up the rupiah value of banks’ liabilities denominated in foreign currencies and put the banks with short position in serious problems;  (ii)  The economic crisis put banks’ customers (debtors) in problems which depressed the value of banks’ assets; and  BIS Review 34/1999  2  (iii)  The tight monetary policy to stabilize inflation and exchange rates, and the concomitant high interest rates, resulted in negative spreads for the banks.