Kawai, MasahiroNewfarmer, RichardSchmukler, Sergio L.2014-08-252014-08-252001-06https://hdl.handle.net/10986/19635The authors investigate the origins of the East Asian crisis and its contagion, examine the channels of contagion, and discuss policy recommendationsThey make detailed recommendations in the context of nine general lessons learned from the East Asian crisis. 1) Preventing crises and contagion: avoid large current account deficits financed through short-term private capital inflows. Aggressively regulate and supervise financial systems to ensure that banks and nonbank financial institutions manage risks prudently. Put in place incentives for sound corporate finance to prevent high leverage ratios and overreliance on foreign borrowing. 2) Managing crises and contagion: In the context of sound policies, mobilize timely external liquidity of sufficient magnitude to restore market confidence. At times of crisis, "bail in" private foreign creditors. When official resources are too limited for the magnitude of the crisis or contagion, and when private creditors are not amenable to coordination, some involuntary private involvement may be needed too. Keep in mind that there is no one-size-fits-all monetary and fiscal stance for responding to crises and contagion. 3) Resolving the systemic consequences of crises and contagion. Move swiftly to establish domestic and international mechanisms for dealing with the assets and liabilities on nonviolable banks and corporations. Cushion the effects of crisis on low-income groups through social policies to ameliorate the inevitable social tensions associated with adjustment. 4) Developing an effective regional financial architecture. Improve mechanisms for preventing, managing, and resolving crises and contagion at the regional level in ways consistent with improvements in the global financial architecture.en-USCC BY 3.0 IGOADBAGGREGATE DEMANDASSET PRICE BUBBLESASSETSBALANCE OF PAYMENTSBALANCE SHEETSBANK DEPOSITSBANK EXPOSUREBANK LIABILITIESBANK LOANSBANK OF KOREABANK OF THAILANDBANKING CRISESBANKING SECTORBOND MARKETSBORROWINGCAPITAL ACCOUNTCAPITAL ACCOUNT LIBERALIZATIONCAPITAL CONTROLSCAPITAL FLIGHTCAPITAL FLOWSCAPITAL GAINSCAPITAL INFLOWSCAPITAL MARKETSCAPITAL OUTFLOWSCDCENTRAL BANKCENTRAL BANKSCOMMERCIAL BANKSCOMPETITIVENESSCONTAGIONCONTINGENT LIABILITIESCORPORATE FINANCECORPORATE SECTORCREDIT BOOMCREDIT EXPANSIONCURRENCY BOARDCURRENCY CRISESCURRENCY CRISISCURRENCY DEVALUATIONSCURRENCY RISKCURRENT ACCOUNTCURRENT ACCOUNT DEFICITSDEBTDEBT CRISISDEFICITSDEMAND DEPOSITSDENOMINATED LOANSDEPOSITORSDEVALUATIONDEVELOPMENT ECONOMICSDOLLAR TERMSDOMESTIC BANKSDOMESTIC CREDITDOMESTIC FINANCIAL INTERMEDIATIONDOMESTIC FINANCIAL MARKETSDOMESTIC FINANCIAL SYSTEMSDOMESTIC INVESTORSDOMESTIC LIQUIDITYDOMESTIC POLICIESECONOMIC BOOMEMERGING MARKET ECONOMIESEMERGING MARKETSEXCHANGE RATEEXCHANGE RATE REGIMEEXCHANGE RATESEXPORT GROWTHEXPORTSEXTERNAL BORROWINGEXTERNAL DEBTEXTERNAL FINANCEEXTERNAL SHOCKSFEDERAL RESERVE BANKFEDERAL RESERVE BANK OF NEW YORKFINANCE COMPANIESFINANCIAL ASSETSFINANCIAL CONTAGIONFINANCIAL CRISESFINANCIAL DISTRESSFINANCIAL GLOBALIZATIONFINANCIAL INSTITUTIONSFINANCIAL INTERMEDIATIONFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL REPORTINGFINANCIAL SECTORFINANCIAL SYSTEMFINANCIAL SYSTEMSFINANCIAL VOLATILITYFISCAL POLICYFOREIGN ASSETSFOREIGN BANKSFOREIGN BORROWINGFOREIGN CAPITALFOREIGN CURRENCYFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN EXCHANGE MARKETSFOREIGN INVESTORSFOREIGN MARKETSFORWARD COMMITMENTSGDPGLOBALIZATIONGOVERNMENT DEBTGOVERNMENT GUARANTEESHEDGE FUNDSHONG KONG MONETARY AUTHORITYINCOME GROUPSINTERDEPENDENCEINTEREST RATE POLICYINTEREST RATESINTERNATIONAL BANKINGINTERNATIONAL BANKING FACILITYINTERNATIONAL CAPITALINTERNATIONAL FINANCIAL ARCHITECTUREINTERNATIONAL FINANCIAL MARKETSINTERNATIONAL RESERVESLIQUID MARKETSLIQUIDITYLIQUIDITY SUPPORTLOCAL CURRENCYLOOTINGLOW INTERESTM2MACROECONOMIC IMBALANCESMACROECONOMIC MANAGEMENTMACROECONOMIC POLICIESMACROECONOMIC POLICYMACROECONOMICSMERCHANT BANKSMONETARY AGGREGATESMONEY MARKETMONEY SUPPLYMULTIPLE EQUILIBRIAMUTUAL FUNDNOMINAL INTEREST RATEOFFSHORE BANKINGPORTFOLIOSPRICE DECLINESPRIVATE BANKSPRIVATE EXTERNAL DEBTPRIVATE SECTORPRODUCTIVITYRECESSIONRISK FACTORSRISK TAKINGSAVINGSSAVINGS DEPOSITSSHORT TERM DEBTSTOCK MARKETSTOCK MARKET PRICESSTOCK MARKETSSTOCK PRICESSUPERVISORY AUTHORITIESTRADINGTRANSPARENCY10.1596/1813-9450-2610