Receive emails when we post new items of interest to you. Subscribe or Modify your profile. Box 1. Asian and Tequila Crises I. Introduction The financial crises that erupted in Asia beginning in mid are now behind us and the economies are recovering strongly.
Pro-Active Policies by China in Response to Asian Financial Crisis
This site All sites. In the mid, international speculators sold voluminously the Thailand Baht, which disrupted the Thai financial system. On July 2 that year, Thailand decided to change the fixed exchange rate into a floating exchange rate, causing devaluation of the Thai money by a big margin, which in tern led to a round of currency devaluation in several other Southeast Asian countries. After October that year, the financial crisis spread to the Republic of Korea and Japan, causing currency devaluation, sharp falls on the stock market and bankruptcy of big companies one after another. In , the crisis continued to spread and deepen.
Governments in both mature and emerging economies no doubt draw lessons from financial crises in order to adopt measures to prevent their recurrence. However, it is often the case that such measures are designed to address the root causes of the last crisis but not the next one. More importantly, they can actually become new sources of instability and crisis.