The changing role of the banking system in the Czech economic reform^**This paper is based on a lecture given at the 46. International Banking Summer School, 1993, held at Baden (Vienna) and organized by the Austrian Bankers Association.

We often read these days in the press about economic reform in Central and Eastern Europe and in doing so we often find the view expressed that everything - particularly privatization - depends on the efficiency of the banking system ^[1][1]See e. g. Trends and policies in privatization, Centre for Cooperation with European Economies in Transition, OECD, Paris 1993.. The writers of these articles then usually go on to say that the banking system is unable to function properly because the banks are saddled with non-performing loans and also that they are seriously undercapitalized, financially weak and inexperienced in risk management. This paper will explain what things are really like in the Czech Republic and say something about the changes which have taken place in recent years.