The background to the major problems that have emerged within Indonesia's finance and banking system is, of course, the rapid fall in exchange rates in other Southeast Asian countries such as Thailand, South Korea and Malaysia since mid-1997. These trends have been exacerbated by continuing sluggish growth in Japan. These events have become well known in the Australian media under labels like the 'Asian economic crisis' or 'Asian financial meltdown'. Such descriptions are fairly misleading, however, because the crisis has by no means affected the whole of Asia (China, Taiwan and India have escaped serious problems) and the effects have varied greatly throughout the region. While the majority of commentators consider that most of the affected countries will have returned to economic health within one or two years, there is much less optimism about Indonesia because the country's political weakness has meant that Jakarta has not yet developed an effective policy response. The prospect of political turmoil is certain to undermine foreign investor confidence in Indonesia, deterring the inflow of the foreign capital essential for restoring the value of Indonesia's currency, the rupiah, and for restarting economic growth.