The full guarantee of depositors and creditors was meant to generate
confidence in the financial sector. However, many see the full guarantee of creditors as
absolving the foreign creditors of much of the risks that they should be responsible for. As is
now clear, the rapid increase in short-term foreign debt since the beginning of the 1990 is one
root cause of the crisis in East-Asia. Much of these short-term borrowings were used to
finance long-term non-viable projects with full approval of the creditors. While the huge
short-term debt together with foreign exchange mismanagement by the authorities led to the
crisis, yet these creditors are being protected. This, together with elements of a fire-sale
strategy in the IMF program as already mentioned, has led to a broad mistrust of the IMF,
with many claiming that the IMF program is more designed for the benefit of foreign interests
rather for Thailand's recovery. The full guarantee of depositors and creditors has also reduced
the government's option on dealing with insolvent financial institutions. Closing them down
simply shifts the full liability to the government.