Indonesia resolved bad loans and recapitalized banks with unusual aggression and speed. Given the disrepute into which banks had fallen, it was politically less difficult to inflict pain on them. The government took control of some $32 billion in bad loans, which would eventually be sold for pennies on the dollar, and injected new capital—typically, simple government bonds—into the banks that were in the best shape. Many of the rest were forced either to merge or to close, and within two years the number of banks in Indonesia had fallen from 240 to 164. Four of the worst state banks were
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