<p>This paper discusses the reform and development the Philippine government undertook during the curren<span style="line-height:1.6em">ncy and financial turmoil in East Asia in the 1980s and 1990s. Its focus is </span><span style="line-height:1.6em">the financial system. </span><span style="line-height:1.6em">The paper also identifies the challenges facing the sector in the light of greater international financial integration. Analysis indicates that the achievement of financial sector stability requires prudential regulation and stable macroeconomic environment. Recommendations regarding regulation, supervision and monitoring in the sector are hoped to aid policymakers in their future endeavors.</span></p>