Podcasts Government Pacific Exchanges Simon Johnson on Lessons From the Asian Financial Crisis

Simon Johnson on Lessons From the Asian Financial Crisis

Published: Sept. 5, 2017, 1 p.m.

In the fourth episode of our series on the Asian financial crisis, we talked with Simon Johnson, 

Some of the key takeaways of our conversation with Simon include:

  • The Asian Financial Crisis was the result of countries running large current account deficits stemming from overvaluation, rather than overinvestment.
  • Corporate governance played a significant role during the crisis. Emerging Asian countries had similar governance problem and vulnerabilities, mainly rooted in family ownership of firms. 
  • Because many of the affected countries were export-oriented, they took advantage of the large depreciation in the real exchange rate in order regain competitiveness and recover from the crisis. 
  • After the crisis, policymakers’ views on capital liberalization changed and many now agree that emerging markets should limit capital inflows during booms.
  • Safeguard measures for future crises involve increasing transparency in governance, as well as implementing high and robust capital requirements and funding policy on bank management.

The views expressed are not necessarily those of the Federal Reserve Bank of San Francisco or of the Federal Reserve System