·  While facing a financial crisis, the IMF could indicate the relative contributions of official finance and private sector finance as well as the domestic economic adjustments required to fill the gap. Before disbursing its share of financing, it should review and assess the country’s efforts to secure the contributions from private creditors required to ensure medium-term sustainability; failing to secure the needed contribution from private creditors could lead to a revision of the program to require additional domestic adjustment. Changes in the functioning of financial markets in the recent years also raise important issues that the international community may have to address. There is no need to underscore how much financial markets have changed in the last two decades under the combined impact of factors such as financial deregulation, technological and financial innovation, intensifying competition among financial institutions and increasing demands for more transparency and greater profitability. These changes have enhanced the overall efficiency of financial markets and, by extension, that of the developed economies: -  Markets have become more transparent and competitive. -  Financial innovations have made it easier for both governments and the corporate sector to raise capital or hedge risks. -  Economic agents with funds to invest, in particular households, can choose from a wider range of investment vehicles offering better returns. -  Growing disintermediation has contributed to less inflationary financing of economies. Despite all these achievements, there have been some surprising developments on financial asset markets.
Banks were an exception to this, and in different countries, the approach to privatization of banks varied. In the Czech Republic, the privatization of banks had been delayed for several years due to the government’s belief that privatized banks would stop providing soft loans to strategically important firms. This fear was underlined by the experience with foreign banks that were entering the market since 1992 and cherrypicking their clients. After several years, the bad debt burden on banks’ balance sheets reached such a scale that government had to step in. Most of the debt ended up with a special governmental agency and the losses are being paid from the state budget. The cost of the bank clean-up in the Czech Republic is estimated at approximately 21% of GDP. In some other countries [Hungary, Poland], the privatization of banks proceeded quicker and the fiscal costs were substantially smaller [est. 6% for Poland, 13% for Hungary; in Szapáry, National Bank of Hungary, 2001]. Given what I have just described, the financial sector in the accession countries is nowadays in remarkably good shape. The banking sector is sound and stable, the role of non-banking intermediation is growing, and clients have access to most of the products and services they have in the EU countries.