diff --git a/Demo/embed/importexc.c b/Demo/embed/importexc.c
index 375ce1b..59b1d01 100644
--- a/Demo/embed/importexc.c
+++ b/Demo/embed/importexc.c
@@ -1,14 +1,20 @@
 #include <Python.h>
 
-char* cmd = "import exceptions";
+#if 0
+char* cmd = "import codecs, encodings.utf_8, types; print(types)";
+#else
+char* cmd = "import types; print(types)";
+#endif
 
 int main()
 {
+	printf("Initialize interpreter\n");
 	Py_Initialize();
 	PyEval_InitThreads();
 	PyRun_SimpleString(cmd);
 	Py_EndInterpreter(PyThreadState_Get());
 
+	printf("\nInitialize subinterpreter\n");
 	Py_NewInterpreter();
 	PyRun_SimpleString(cmd);
 	Py_Finalize();
diff --git a/Include/pystate.h b/Include/pystate.h
index 8508da0..e02df88 100644
--- a/Include/pystate.h
+++ b/Include/pystate.h
@@ -27,6 +27,7 @@
     PyObject *codec_search_path;
     PyObject *codec_search_cache;
     PyObject *codec_error_registry;
+    int codecs_initialized;
 
 #ifdef HAVE_DLOPEN
     int dlopenflags;
diff --git a/Misc/NEWS b/Misc/NEWS
index 72a482e..b8d17c1 100644
--- a/Misc/NEWS
+++ b/Misc/NEWS
@@ -15,6 +15,8 @@
 Core and Builtins
 -----------------
 
+- Issue 3723: Fixed initialization of subinterpreters.
+
 - Issue #4213: The file system encoding is now normalized by the
   codec subsystem, for example UTF-8 is turned into utf-8.
 
diff --git a/Objects/unicodeobject.c b/Objects/unicodeobject.c
index ecd44cb..2beb098 100644
--- a/Objects/unicodeobject.c
+++ b/Objects/unicodeobject.c
@@ -1346,6 +1346,19 @@
 #endif
 	else if (strcmp(encoding, "ascii") == 0)
 	    return PyUnicode_AsASCIIString(unicode);
+        /* During bootstrap, we may need to find the encodings
+           package, to load the file system encoding, and require the
+           file system encoding in order to load the encodings
+           package.
+
+           Break out of this dependency by assuming that the path to
+           the encodings module is ASCII-only.  XXX could try wcstombs
+           instead, if the file system encoding is the locale's
+           encoding. */
+        else if (Py_FileSystemDefaultEncoding &&
+                 strcmp(encoding, Py_FileSystemDefaultEncoding) == 0 &&
+                 !PyThreadState_GET()->interp->codecs_initialized)
+	    return PyUnicode_AsASCIIString(unicode);            
     }
 
     /* Encode via the codec registry */
diff --git a/Python/bltinmodule.c b/Python/bltinmodule.c
index 8159fe8..d7f5084 100644
--- a/Python/bltinmodule.c
+++ b/Python/bltinmodule.c
@@ -2282,7 +2282,7 @@
 	PyModuleDef_HEAD_INIT,
 	"builtins",
 	builtin_doc,
-	0,
+	-1, /* multiple "initialization" just copies the module dict. */
 	builtin_methods,
 	NULL,
 	NULL,
diff --git a/Python/codecs.c b/Python/codecs.c
index 66576c4..ebddc09 100644
--- a/Python/codecs.c
+++ b/Python/codecs.c
@@ -869,5 +869,6 @@
 	return -1;
     }
     Py_DECREF(mod);
+    interp->codecs_initialized = 1;
     return 0;
 }
diff --git a/Python/pystate.c b/Python/pystate.c
index 9479256..2a9b744 100644
--- a/Python/pystate.c
+++ b/Python/pystate.c
@@ -76,6 +76,7 @@
 		interp->codec_search_path = NULL;
 		interp->codec_search_cache = NULL;
 		interp->codec_error_registry = NULL;
+		interp->codecs_initialized = 0;
 #ifdef HAVE_DLOPEN
 #ifdef RTLD_NOW
                 interp->dlopenflags = RTLD_NOW;
diff --git a/Python/pythonrun.c b/Python/pythonrun.c
index 4fb2b3e..61cdf6d 100644
--- a/Python/pythonrun.c
+++ b/Python/pythonrun.c
@@ -562,8 +562,13 @@
 			goto handle_error;
 		Py_INCREF(interp->builtins);
 	}
+
+	/* initialize builtin exceptions */
+	_PyExc_Init();
+
 	sysmod = _PyImport_FindExtension("sys", "sys");
 	if (bimod != NULL && sysmod != NULL) {
+		PyObject *pstderr;
 		interp->sysdict = PyModule_GetDict(sysmod);
 		if (interp->sysdict == NULL)
 			goto handle_error;
@@ -571,7 +576,18 @@
 		PySys_SetPath(Py_GetPath());
 		PyDict_SetItemString(interp->sysdict, "modules",
 				     interp->modules);
+		/* Set up a preliminary stderr printer until we have enough
+		   infrastructure for the io module in place. */
+		pstderr = PyFile_NewStdPrinter(fileno(stderr));
+		if (pstderr == NULL)
+			Py_FatalError("Py_Initialize: can't set preliminary stderr");
+		PySys_SetObject("stderr", pstderr);
+		PySys_SetObject("__stderr__", pstderr);
+
 		_PyImportHooks_Init();
+                if (initstdio() < 0)
+                    Py_FatalError(
+                        "Py_Initialize: can't initialize sys standard streams");
 		initmain();
 		if (!Py_NoSiteFlag)
 			initsite();
diff --git a/Python/sysmodule.c b/Python/sysmodule.c
index 952f7e5..af960bc 100644
--- a/Python/sysmodule.c
+++ b/Python/sysmodule.c
@@ -1231,7 +1231,7 @@
 	PyModuleDef_HEAD_INIT,
 	"sys",
 	sys_doc,
-	0,
+	-1, /* multiple "initialization" just copies the module dict. */
 	sys_methods,
 	NULL,
 	NULL,