Asset price volatility on world financial markets and foreign exchange markets has increased significantly since the Mexican peso crisis of December 1994. The Asian financial crisis, still underway, will leave significant costs in its wake. The notion that emerging markets can sort out their own problems if left to their own devices is no longer plausible, and policymakers cannot afford to adopt a laissez-faire attitude to this issue. The traditional IMF response of containment is a debatable solution. This report addresses these issues with emphasis on the important lessons that can be learned from the recent events in Asia.
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