During the 1980s virtually all Asian Countries liberalized their domestic financial systems. In many of these countries, this was accompanied by the relaxation of capital controls and a move toward more flexible exchange rate arrangements. These developments have altered the channels of monetary policy, affected the relationship between money demand and incomes and interest rates, and prompted a reassessment of the appropriate instruments of monetary policy. This paper focuses on these and other issues of monetary policy in the wake of the financial reforms.

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