The Road to and from the East Asia’s Currency and Economic Crisis

The Asian financial crisis, which began in Thailand in July 1997, quickly spread to neighboring countries in East Asia, Hong Kong, South Korea, and the following year, Russia and Latin America. Countries in crisis were forced to accept IMF conditionality in order to receive emergency loans, and structural reforms were pursued. But that prescription didn't stop the crisis, it only made it worse. Because the crisis was different in nature from previous experiences of economic crises in developing regions of Latin America, the IMF's prescription for countries in crisis was strongly criticized. As for the causes of the crisis, there was a sharp conflict between the two perceptions: one was that of the IMF and mainstream economics, looking for the causes in institutions and policies of Asian countries; and the other, that of anti-mainstream economists, with an interpretation that focused on the international liquidity of capital and looked for the cause to be excess liquidity in short-term capital. East Asian countries have accepted the structural reforms of the IMF on the one hand, and on the other hand, they have recognized the risks posed by unilateral dependence on international organizations such as the IMF, and have come to seek institutionalization of regional cooperation to avoid them.