The Thai financial system has come a long way from the crisis in 1997, having returned to stability and consolidated on a large scale. Importantly, the maturity and currency mismatches in commercial banks vis-à-vis nonresidents, which were pivotal factors in propagating the crisis, has virtually disappeared. As of June 1997, about one-quarter of commercial banks’ liabilities were foreign, around 49 billion US dollars, over half of which were short- term. At the same time, liquid foreign assets (cash and deposits at foreign banks) amounted to only around 3 billion US dollars implying an enormous potential short-term foreign financing gap. In contrast, at end-2002 banks’ liquid foreign assets exceeded their short-term foreign liabilities by over 3 billion US dollars. The nature of sectoral exposures has changed considerably as well with a small net asset position vis-à-vis the other three sectors (ie. the government, the non-bank sector, and the rest of the world) compared with the large net liability position of the banking sector vis-à-vis the rest of the world at end-1997