The South East Asian Crisis was one that many did not see coming but seemed almost improbable because of the many decades, of great performance from their economies, their region had. What it essentially came down to was a weak financial system and governance that left much to be desired. To be more specific there was a combination of different factors that contributed to this issue: insufficient supervision of the financial sector, lack of extensive review and management of potential financial risk, and little regulation of banks that pursued fixed exchanged rates. One of the biggest factors that made this situation worse was the large loans given to corporations that were set in short payback terms in foreign currency without any form of hedging. The first domino to fall in this region was Thailand mainly from all attacks in regards to the strength of their currency the baht. Following this event like a plague, the rest of the economies within that region began to suffer as a result of devaluation of the baht thus this gave other investors the impression that this was likely to happen elsewhere. The dark cloud that had spread over this region now seemed to be even more grim when it looked like Korea might default. The reason why this was so important was because at that time Korea was the 11th largest economy and a default by them posed a potential threat to the international monetary system. For the rest of the world the most important task would be to make sure that the crisis didn’t spread elsewhere. And the IMF took the responsibility of being the primary safeguard for the international monetary system and the only way they could ensure this was by restoring confidence in those economies affected. The IMF took several measures that would produce results and the first step came in form of establishing a plan for addressing the three most affected countries, Indonesia, Korea, and Thailand, to stabilize their economies reform their government and corporate governance policies. Then the IMF would provide would provide about US $35 billion in the form of support for those nations. There would also be more aid provided from other bilateral and multilateral sources that would produce about US $77 billion in financing reform programs. Over the next several years more funds would come into those countries specifically Indonesia. With that well established the IMF now would set into motion the reforms necessary for the change in the region. First, there would be a temporary tightening of monetary policy to deal with the exchange rate depreciation. Second, correcting the flaws that made the financial system weak while addressing those policies that would impede the growth of competition. The third and most important would come in the form of structural reforms that could include establishing sound fiscal policies and eventually leading for external lines of financing. Bibliography www.imf.org. Date accessed: may 10, 2009. Currency crisis.: South East Asia. Craine, Naomi. Stock Market Plunge In Asia Worries Capitalists; Thailand 'bailout' means austerity for workers. the Militant, Vol. 61, no. 31. 15 September, 1997 Nanto, Dick K. THE 1997-98 ASIAN FINANCIAL CRISIS. CRS Report. February 6, 1998. http://pacific.commerce.ubc.ca