This paper considers the main elements of the standard pattern of financial liberalization that has become widely prevalent in developing countries. The theoretical arguments in favour of such liberalization are considered and critiqued, and the political economy of such measures is discussed. The problems for developing countries, with respect to fi nancial fragility and the greater propensity to crisis, as well as the negative defl ationary and developmental effects, are discussed. It is concluded that there is a strong case for developing countries to ensure that their own financial systems are adequately regulated with respect to their own specific requirements. The nature of financial liberalization -- The theoretical arguments for financial liberalization -- The political economy of financial liberalization -- The negative effects of financial liberalization -- Alternative strategies for developing country financial systems.