The East Asian Financial Crisis: A Reflection on its Causes, Consequences and Policy Implications

Abstract

This paper looks into the causes and the economic and social implications of the East Asian currency crisis. It discusses various approaches to policy design for crisis prevention and better crisis management. Focusing first on the desirability of capital account liberalisation and the preconditions for its economic viability, the discussion proceeds to the topic of international prudential supervisory standards and risk weighted capital charges. With respect to crisis management, the focus is not restricted to adequate liquidity provision but also extends to desirable orderly work-out procedures and thus for private sector participation in burden sharing. We finally look at the need for further research into this area.