Asian and European Financial Crises Compared

Edwin Truman

No WP13-9, Working Paper Series from Peterson Institute for International Economics

Abstract: The European and Asian financial crises are the two most recent major regional crises. This paper compares their origins and evolution. The origins of the two sets of crises were different in some respects, but broadly similar. The two sets of crises also shared similarities in their evolution, but here the differences were more significant. The European crisis countries received more external financial support, despite the fact that they involved more solvency issues while the Asian crises involved more liquidity issues. On balance, the reform programs in the European crises were less demanding and rigorous than in the Asian crises. Partly as a consequence, the negative impacts on the global economy have been larger. Author Edwin M. Truman draws three lessons from this analysis: First, history will repeat itself; there will be other external financial crises. Second, other countries have a stake in appropriate crisis management. Third, the International Monetary Fund (IMF) and other countries were mistaken in treating the European crises as individual country crises rather than as a crisis for the euro area as a whole that demanded policy conditionality on all members of the euro area.

Keywords: financial crises; Asian financial crises; European financial crises; International Monetary Fund; European Central Bank; crisis management; policy coordination; macroeconomic policies; banking policies (search for similar items in EconPapers)
JEL-codes: F20 F3 F31 F32 F34 F36 F42 (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-cba, nep-cwa, nep-eec, nep-fmk, nep-mon, nep-opm and nep-sea
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Citations: View citations in EconPapers (4)

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