Yoshino, N., Morgan, P. J., Rana, P. B., & Genberg, H. (2018). In Global shocks and the New Global and Regional Financial Architecture: Asian Perspectives (pp. 114–142). essay, Asian Development Bank Institute and S. Rajaratnam School of International Studies.


Discipline: Economics & Finance


Twenty years ago, much of Asia was engulfed in a severe financial crisis that is still present in the memory of those who experienced it first-hand. The Asian financial crisis of 1997–1998 was a painful reminder of the harm that currency and banking crises can inflict on the real economy. Asian policy makers took notice and introduced policy reforms to strengthen their financial markets and render policy frameworks more resilient. Important components of these reforms were to allow greater exchange rates flexibility, strengthen regulatory and monetary policy institutions, and pursue liberalization of financial markets cautiously, among other things, by making use of what now is being referred to as macroprudential and capital account management policies.

Focusing principally on monetary policy developments, this chapter reviews the sources of potential threats to financial stability, discusses how they impact emerging market economies, and what policy makers in the affected economies might do to mitigate the fallouts of the threats should they materialize.