Asian problems and the IMF
Article Abstract:
The Asian economic crisis is traceable to the faulty judgments of the countries' private financiers. They financed long-term loans with short-term renewable foreign credit. They incurred loans in foreign currencies while they provided local loans in their own currencies. They also neglected to check on their borrowers' assets and liabilities. The International Monetary Fund aggravated the problem by bailing out these local banks and giving them the means to pay their foreign debts instead of letting them solve their own problems and forcing them to reform their ineffective monetary policies.
Publication Name: The Cato Journal
Subject: Political science
ISSN: 0273-3072
Year: 1999
User Contributions:
Comment about this article or add new information about this topic:
How to avoid international financial crises
Article Abstract:
The Asian financial crisis was triggered by the countries' persistent policy of imposing fixed currency exchange rates. This would not have been disastrous if they had maintained their foreign reserve levels at 100% that of their domestic economy. However, if they depleted their reserves for the seemingly positive intent of rescuing failed banks, then, they have exposed their currencies to the risk of devaluation. On the opposite extreme, a unified monetary system such as the one used by the different states of the US, suffer from a lack of flexibility in regional prices and wages.
Publication Name: The Cato Journal
Subject: Political science
ISSN: 0273-3072
Year: 1999
User Contributions:
Comment about this article or add new information about this topic:
How to establish monetary stability in Asia
Article Abstract:
Preventing the repetition of a financial crisis similar to the one that happened in Asia in 1997 necessitates knowledge of the distinctions between exchange rates based on floating, fixed and pegged systems. Floating and fixed exchange rates systems are both free market structures. Floating systems automatically reflect actual exchange rates, while fixed rate systems use foreign reserves for balancing the monetary base. The malfunctional pegged system, which was the one used in Asia, encourages discrepancies between exchange rates and monetary policies.
Publication Name: The Cato Journal
Subject: Political science
ISSN: 0273-3072
Year: 1999
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Parties, populism, and anti-establishment politics in East Central Europe. Populism in Europe
- Abstracts: The post-modern state and the world order. Europe: the post-modern state and world order
- Abstracts: Reevaluating methods of establishing priorities for governmental services. Administrative creativity in local government
- Abstracts: Speed limits, human lives, and convenience: a reply to Ridge. Comparing harms: headaches and human lives
- Abstracts: Senate approves 'Nunn-Lugar II' to counter domestic WMD threats. Lugar cites CTR progress, calls on US for more aid