Research Department
Authorized for distribution by Peter Isard
Contents
I. Introduction
II. The Asian Twin Crises: Some Stylized Facts
A. Maturity and Currency Mismatches
B. The Bust
C. Policy Responses
III. Model
A. The Linkage from the Currency Depreciation to Bank Runs
B. The Reverse Linkage
C. Multiple Equilibria
D. How Panics Depend on the Fundamentals
IV.The Limits of Monetary Policy
A. The Irrelevance of Interest Rates
B. Implications for Exchange Rate Regimes
V. The International LOLR
A. A Global Central Bank
B. An “International Banking Fund”
C. International Agency Problems
VI. Concluding Comments
Figures
Figure 1. Reserves and Short-Term Debt
Figure 2. Exchange Rates (1990–2000)
Figure 3. Money Market Interest Rates
Figure 4. Real GDP (1991=100)
Figure 5. The Vicious Spiral
Figure 6. Twin Crisis Equilibria
Figure 7. Discount-Window Lending
Figure 8. Guarantee on Dollar Deposits
Table 1
Appendix I
Appendix II
References