Authors: Morris Goldstein, Institute for International Economics Staff, M. Goldstein, C. Fred Bergsten
ISBN-13: 9780881322613, ISBN-10: 088132261X
Format: Paperback
Publisher: Peterson Institute for International Economics
Date Published: June 1998
Edition: 1st Edition
The turmoil that has rocked Asian markets since the middle of 1997, and that is now having such deep effects on the economies in the region, is the third major currency crisis of the 1990s. This study explains how the Asian crisis arose and spread. It then outlines the corrective policy measures that could help end the crisis, and the shortcomings that have been revealed in the international financial system that require reform to reduce the chances of a recurrence.
In analyzing the origins of the crisis, the author emphasizes three interrelated sets of factors: financial sector weaknesses in Asian emerging economies along with easy global liquidity conditions; mounting concerns about external sector problems in these countries; and contagion of financial pressures from Thailand (both around and beyond the region).
The discussion of policy initiatives to help end the crisis focuses, inter alia, on: restructuring and reform of financial sectors and prudential oversight in Asia itself; on fiscal policies and measures to deal with the bad loan problem in Japan; on exchange rate policy; and on the design and effectiveness of IMF-led official rescue packages.
Preface | vii | |
Acknowledgments | xi | |
1 | Introduction | 1 |
2 | Origins of the Crisis | 7 |
Financial-Sector Weaknesses | 7 | |
External-Sector Problems | 14 | |
Contagion | 17 | |
3 | How to Fix It | 23 |
Restructuring and Reform of Financial Sectors and Prudential Oversight in the ASEAN-4 Economies and South Korea | 23 | |
Exchange Rate Policies in Asia and Trade Policies in the G-7 | 26 | |
Japan's Role | 28 | |
China's Role | 30 | |
IMF Rescue Packages | 31 | |
4 | Halifax II Reforms | 45 |
Moral Hazard and Debt Rescheduling | 46 | |
Prudential/Supervisory Standards | 53 | |
Transparency and Disclosure in International Financial Markets | 57 | |
IMF Surveillance | 59 | |
Risk Management in Global Financial Institutions | 62 | |
5 | Lessons of the Asian Crisis and Concluding Remarks | 65 |
Appendix | List of Core Principles for Effective Banking Supervision | 69 |
References | 73 |