Events
Asian Financial Crisis (1997-98)
Also Known As Asian Contagion
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After months defending its currency, the Bank of Thailand let the baht float on July 2, 1997, and it collapsed under the weight of short-term dollar borrowing by Thai banks and firms. Contagion spread through trade and financial linkages to Indonesia, South Korea, Malaysia and the Philippines; by January 1998 the rupiah had lost about 81 percent of its value and the baht about 56 percent. The IMF, with the World Bank, the Asian Development Bank and bilateral lenders, assembled roughly 120 billion dollars in rescue funds for Thailand, Indonesia and South Korea, conditioned on monetary, fiscal and financial-sector reforms that proved deeply unpopular in the region.
Facts
LocationThailand, Indonesia, South Korea and East/Southeast Asia 1 Cross-Tradition Connections
Associated With
The G20 was conceived directly in response to the emerging-market debt crises of the late 1990s, the 1997 Asian financial crisis foremost among the founders' stated reasons for wanting a broader standing forum.
The IMF led roughly 120 billion dollars in rescue packages for Thailand, Indonesia and South Korea, conditioned on structural reforms.
In the Other Atlases
Sources
1. Encyclopaedia Britannica
Encyclopaedia Britannica, Inc.Asian financial crisis of 1997
1. Encyclopaedia Britannica
Encyclopaedia Britannica, Inc.Associated With: International Monetary Fund
2. Wikipedia
Wikimedia Foundation1997 Asian financial crisisQuote, 1997 Asian financial crisis
the Thai government was eventually forced to float the Baht, on 2 July 1997
2. Wikipedia
Wikimedia FoundationAssociated With: Group of Twenty (G20), G20, OriginsQuote, Associated With: Group of Twenty (G20), G20, Origins
the series of massive debt crises that had spread across emerging markets in the late 1990s, beginning with the Mexican peso crisis and followed by the 1997 Asian financial crisis, the 1998 Russian financial crisis
Dissenting Readings (1 dissenting reading)
Description
The IMF's own contemporaneous diagnosis blamed "crony capitalism," weak bank supervision and opaque corporate governance in the affected countries, and made structural reform the price of its rescue loans. Critics including Joseph Stiglitz and, separately, Jeffrey Sachs and Steven Radelet argued the crisis was chiefly a self-fulfilling panic among foreign creditors amplified by premature capital-account liberalization the IMF itself had encouraged, and that the Fund's austerity conditions deepened the contraction rather than curing its cause. The dispute reshaped IMF practice on capital controls in the following decade.
A dissenting reading, from Joseph Stiglitz and Jeffrey Sachs, against the IMF's own diagnosisEncyclopaedia Britannica, Encyclopaedia Britannica, Inc.
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