Understanding the Asian Crisis: Recommendations for Policy

Abstract

The 1997 Asian crisis is described in order to show a plausible chain of causes and events that led to the eventual collapse of many Asian currencies. Empirical evidence is presented based upon the experiences of five Southeast Asian countries that were severely affected by the crisis. Policies are recommended in the setting of exchange rates, the monitoring and liberalisation of banks, the foreign ownership of domestic assets and the augmentation of foreign exchange reserves.