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Crisis, reform and recovery

The Asian financial crisis of 1997-98 shook the foundations of the global economy and what began as a localised currency crisis soon engulfed the entire Asian region. This book explores what went wrong and how did the Asian economies long considered 'miracles' respond, among other things. The combined effects of growing unemployment, rising inflation, and the absence of a meaningful social safety-net system, pushed large numbers of displaced workers and their families into poverty. Resolving Thailand's notorious non-performing loans problem will depend on the fortunes of the country's real economy, and on the success of Thai Asset Management Corporation (TAMC). Under International Monetary Fund's (IMF) oversight, the Indonesian government has also taken steps to deal with the massive debt problem. After Indonesian Debt Restructuring Agency's (INDRA) failure, the Indonesian government passed the Company Bankruptcy and Debt Restructuring and/or Rehabilitation Act to facilitate reorganization of illiquid, but financially viable companies. Economic reforms in Korea were started by Kim Dae-Jung. the partial convertibility of the Renminbi (RMB), not being heavy burdened with short-term debt liabilities, and rapid foreign trade explains China's remarkable immunity to the "Asian flu". The proposed sovereign debt restructuring mechanism (SDRM) (modeled on corporate bankruptcy law) would allow countries to seek legal protection from creditors that stand in the way of restructuring, and in exchange debtors would have to negotiate with their creditors in good faith.

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The evolving international financial architecture

; on unhedged exposure to currency fluctuations; and on the impact of selective capital-account liberalization. Moreover, in order to prevent a private debt problem rapidly turning into a sovereign debt problem, guidelines on good practices in public debt management are currently being developed by the IMF and the World Bank with international debt-management experts. Similarly, measures are also being developed to make capital flows less volatile and the exchange-rate regimes more realistic, and to make domestic asset prices better reflect the actual underlying returns

in The Asian financial crisis
Open Access (free)
Crisis, reform and recovery

Indonesia: crisis, reform and recovery negotiate debt payments with institutions that faced possible closure.” It should also be noted that given the ongoing political instability at the time, many debtors were unwilling to enter into negotiations. In this climate, if some hoped that the problem would go away, others used stalling tactics in anticipation of improvements in the exchange rate. Under IMF’s oversight, the Indonesian government has also taken steps to deal with the massive debt problem. In June 1998, the government reached agreement (the Frankfurt agreement

in The Asian financial crisis