Sean Turnell, Economics Department, Macquarie University, Sydney, Australia. Abstract: "A country's financial system plays a critical role in its economic development. It is the vehicle through which the means of exchange are created, resources are mobilised and allocated, risks are managed, government spending is financed, foreign capital is accessed, and it is via financial institutions that individuals can protect themselves against economic fluctuations. Notwithstanding this essential role, Burma has not had a properly functioning financial system for four decades. The present system, an unstable mix of monolithic state-owned institutions and a cohort of new private banks of dubious legitimacy, is a serious brake on Burma's economy. This paper examines the role financial institutions can play in a country's development, explores how Burma's current system falls far short of this ideal and broadly outlines how it might be reformed. It argues the case for the standard remedies professed by economists of liberalisation, stabilisation and privatisation but, critically, suggests that these must be preceded by more fundamental reforms that create the legal, regulatory and other infrastructure that are the prerequisites of a modern, and efficient, financial system. ..". Keywords: Burma; Banks; Regulation; Supervision; Financial Liberalisation; Economic Development. Paper presented to the 1st Collaborative International Conference of the Burma Studies Group, Gothenburg, Sweden, 21-25 September 2002