‘False Friends’ and Banking Reform

Abstract

1. The problems discussed here refer primarily to banking systems in transition economies, but they apply equally to other economies where banking reform has been undertaken. We shall begin by sketching out the progress made in transition economies in recent years and will then go on to warn about the dangers of ‘paper reforms’ and doing things half way. These pitfalls are what is here meant by the expression ‘false friends’.

However large the arsenal of financial reforms and regulations may appear, it will all prove useless, and maybe even counterproductive, if they only go half way.

A. de Juan

Address given at the Annual Meeting of the European Bank for Reconstruction and Development held in London in April 1995.