Lessons from the Tequila Crisis for successful financial liberation

Article Abstract:

One of the most important developments to occur within emerging financial markets since 1979 was the so-called Tequila Crisis of 1994-1995, which originated in Mexico and spread to Brazil and Argentina. The problem sparked furious debate among economists and policy makers about the sources of financial vulnerability in emerging markets and, in particular, about the need to reform the global financial structure to make such crises less likely to occur. An analysis of the Tequila Crisis reveals a number of important lessons to be learned for successful financial liberalization programs.

---

Lessons from the Tequila Crisis

Article Abstract:

The Tequila Crisis that began in Mexico and spread to Brazil and Argentina in 1994-1995 holds many important lessons for emerging market states. Four basic policy lessons to be learned include the dangers of pegged exchange rate systems, the importance of managing financial liberalization and the need for strong, prudent supervision of the banking system to prevent crisis situations. The overriding lesson to be learned is that economists must consider the key differences between the institutional framework of emerging market financial systems and that of industrialized states.

---

Policymakers roundtable

Article Abstract:

It is argued that the most important lesson the Tequila Crisis of 1994-1995 holds for Argentina is that it has an excellent monetary system and a potentially excellent financial system but still has considerable progress to make to develop the monetary and financial systems it desires. Despite the short term difficulties arising from the Tequila effect, Argentina must continue to correct existing flaws in its financial system, such as the need for a monetary disciplinary regime for its provincial governments.

Public Finance Activities, Fiscal Policy

Similar abstracts:

• Abstracts: Pumped up for success. Going against the grain. Enter the dragon: how a Saskatchewan CA gets his kicks
• Abstracts: Cultivating the squirrel instinct. Gilt lining. How low charges beat high returns
• Abstracts: Disqualifying dispositions of incentive stock options: tax benefits versus financial reporting costs. The influence of risk diversification on the early exercise of employee stock options by executive officers
• Abstracts: Special focus: challenges for the euro area. EMU and the evolution of financial structure. Highlights of recent developments in financial markets
• Abstracts: Bargains from the value basement. Brilliant, stupid, and 15% off. Wonderstocks: the second coming

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.