MSYS is a collection of GNU utilities such as bash, make, gawk and grep to allow building of applications and programs which depend on traditionally UNIX tools to be present. It is intended to supplement MinGW and the deficiencies of the cmd shell.
An example would be building a library that uses the autotools build system. Users will typically run "./configure" then "make" to build it. The configure shell script requires a shell script interpreter which is not present on Windows systems, but provided by MSYS.
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