The net increase in our monetary base was around 500 billion euro as banks reduced their use of shorter maturity facilities. Our particular method of supplying primary liquidity makes the future absorption of liquidity in excess of the minimum reserve requirements easy to achieve. Banks have to repay what they have borrowed when maturity is reached.
In fact it is the Asian crisis that brought into clear focus the close links between micro and macro aspects of economic growth as well as institutional aspects as distinct from policy aspects of economic management. Effective market mechanisms must, therefore, be instituted to ensure efficient capital mobilisation and its prudent allocation in securing long-term economic growth with assured stability.