1. Introduction -- 2. The preconditions of financial reform -- 3. The supportive role of monetary and other macroeconomic policies -- 4. The institutional environment for a sound financial system -- 5. The restructuring of enterprises -- 6. The restructuring of banks -- 7. Long-term issues: nonbank intermediaries and capital markets -- 8. Is there one blueprint for financial sector reform?.

This report summarizes the discussions that took place at the senior policy seminar September 10-12, 1990, on the subject of Financial Sector Reform in Transitional Socialist Economies. The purpose of the seminar was to exchange ideas and experiences about key issues of financial sector reform that were relevant to the emerging situation of transitional economies, especially in the Central and Eastern European countries. Detailed issues such as the appropriate steps required to restructure banks; the implications that enterprise restructuring, including privatization, might be expected to have for the financial sector; and the appropriate stance of supportive macroeconomic policies constituted the central focus of the seminar. The report focuses on the following seven areas: (1) key issues in the financial structure needed to condition the design of reform programs; (2) aspects of the overall monetary policy of an economy that can have important effects on the process of financial sector reform; (3) institutional preconditions for a healthy financial system; (4) the main issues involved in restructuring productive sector enterprises; (5) the restructuring of banks and financial institutions; (6) selected longer term issues in financial reform, especially the role of nonbank intermediaries, money, and capital markets; and (7) a synthesis of the different themes of the discussion to establish the extent to which it is possible to specify a blueprint for future action.