U.S. bank exposure to emerging-market countries during recent financial crises

Global financial markets have experienced significant volatility in recent years, including financial crises in Asia in 1997 and in Russia in 1998. Emerging-market countries, in particular, were subject to sharp downward market moves. U.S. banking supervisors monitored these events carefully to determine the potential effect on U.S. banking organizations and paid particular attention to U.S. bank claims on emerging-market counterparties. Monitoring claims on emerging-market counterparties allows supervisors to identify any developing concentrations of risk that might warrant supervisory action and, if necessary, to assess the effect that a potential emerging-market crisis might have on U.S. banks. This article focuses on the claims U.S. banks held on emerging-market counterparties during the two-year period from June 1997 to June 1999 and discusses the different ways that emerging-market claims can be analyzed. In addition, the article provides a short analysis of the claims held by other developed-country banks on emerging-market countries to show the relative size of U.S. bank claims. Finally, the data from the 1997-99 period are discussed in the broader historical context of U.S. banks' country exposure dating back to 1982.