Global, Regional and National Approaches to the International Financial Architecture: Lessons from the East Asian Crisis

摘要

The extraordinary turbulence in East Asia during 1997-98 has sparked a wide-ranging debate on the causes of the crisis, lessons to be learnt, and the desirable architecture of the international financial system. Among policy makers, international financial institutions and private organizations, and in academic circles, views are converging on the causes of the East Asian crisis: It was the result of interactions between massive capital inflows and outflows facilitated by financial globalization and weak national institutions in the affected economies. Discussions have been proceeding on how the international financial system can be improved, and how the underpinnings of individual economies can be strengthened, to maximize the benefits of, and reduce the risks posed by, global financial integration. The Thai baht devaluation in July 1997 was caused essentially by the investor perceptions of deteriorating financial sector conditions and of unsustainable overvaluation of the currency. Once the Thai baht collapsed, the currency crisis spread quickly to the Philippines, Indonesia, Malaysia, and Korea within a matter of a few months. The speed and extent of regional contagion of currency crisis was remarkable. The strong contagion effects within East Asia suggest that the economic linkage through intra-regional trade, direct investment, and finance was much more pronounced there than in other regions.