Indonesia with Nukes: The Russian Crisis

Onno Beaufort Wijnholds

Chapter 4 in Fighting Financial Fires, 2011, pp 70-79 from Palgrave Macmillan

Abstract: Abstract The rapid recovery of Korea and the improved situation in Indonesia in the spring and early summer of 1998 helped to calm financial markets. Market indicators, such as bond spreads and appetite for risk, improved and exchange rates remained reasonably stable. There were still problems in some emerging countries, but a sense that the worst was over was taking hold. This feeling was short-lived, however, as in the second half of 1998 three events combined to shock the world financial system once again. The first jolt came on August 17, when the Russian government announced a partial default. Soon afterwards, Wall Street was shaken when Long-Term Capital Management (LTCM), a large hedge fund, had to be rescued. Following this, with markets, governments, and central banks already in a state of heightened nervousness, a serious deterioration of the situation in Brazil took place. The IMF played a major role in getting both Russia and Brazil back on their feet. Once again, the Fund was attacked, although this was limited to its handling of the Russian crisis; the Brazilian crisis generated little controversy.

Keywords: Monetary Policy; Hedge Fund; International Reserve; Currency Board; Russian Central (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-35420-3_5

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DOI: 10.1057/9780230354203_5

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