Vice chair of Federal Reserve Stanley Fischer and IMF changed asia for good

As he steps down as vice chair of the Federal Reserve, Stanley Fischer has been saluted for his overall contribution to central banking. His complex legacy after transforming key Asian economies should not be forgotten.

As first deputy managing director of the International Monetary Fund ( IMF) in the late 1990s, he played an important role in the emergency loans to Thailand, Indonesia and South Korea when their currencies collapsed. All three are American allies, and the last two are pivotal strategically.

That the nations required rescue amid the Asian economic crash is beyond question. The conditions attached to the loans, at least initially, were controversial.

Especially in Indonesia, the prescriptions were perceived as onerous and doctrinaire: limit government spending, end subsidies, raise interest rates, close banks. While the IMF did eventually revisit some of these, the short-term damage was done.

In South Korea, a deep recession helped usher one-time dissident Kim Dae-jung into the presidency in 1998. After campaigning against the IMF and the strings attached to its aid, Kim ultimately embraced it after becoming the first elected opposition leader.

The IMF certainly shouldn’t lend money for free. And some of these countries were indeed accidents waiting to happen.