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The Asian Liquidity Crisis

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  • Velasco, A.
  • Chang, R.

Abstract

A country's financial system is internationally illiquid if its potential short term obligations in foreign currency exceed the amount of foreign currency it can have access to in short notice. This condition may be crucial for the existence of financial crises and/or exchange rate collapses (Chang and Velasc 1998a, b). In this paper we argue that the 1997-98 crises in Asia were in fact a consequence of international illiquidity.

Suggested Citation

  • Velasco, A. & Chang, R., 1998. "The Asian Liquidity Crisis," Working Papers 98-27, C.V. Starr Center for Applied Economics, New York University.
    • Handle: RePEc:cvs:starer:98-27
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    as
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    2. Gavin, Michael & Hausmann, Ricardo, 1996. "The Roots of Banking Crises: The Macroeconomic Context," IDB Publications (Working Papers) 6067, Inter-American Development Bank.
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    More about this item

    Keywords

    LIQUIDITY ; BANKS ; CURRENCIES ; MONETARY CRISIS;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G2 - Financial Economics - - Financial Institutions and Services

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