THE 1990S HAVE seen three large international financial crises shake the
world economy: the collapse of western Europe’s Exchange Rate Mechanism
(ERM) in the fall of 1992, the collapse of the Mexican peso in the
winter of 1994–95, and the East Asian financial crisis of 1997–98. Other
crises late in the decade, in Brazil and Russia, did not develop the scope
or reach of these three, even though observers and central bankers at the
time feared that their consequences could become even worse.