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N° 175 |
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| January 1999 |
| The Japanese Banking Crisis
and World Financial Instability |
| Cyrille Lacu |
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| The deepening of the Japanese financial crisis
has increased the risks to the international financial system, over the last couple
of years. The crisis has amplified capital movements, towards the emerging Asian
economies (check) where they aggravated the speculative bubbles. Subsequently,
such capital movements have been towards the western financial markets, especially
America, thus contributing to the rise of stock markets and the probabilities
of a brutal turnaround. Until last September, these movements led to the fall
of the yen and worsened the risks of a Chinese devaluation or further depreciation
in the Asian crisis economies. Since then, the opposite has occurred, though without
any profound change having taken place the Japanese outlook. Unless a credible
consolidation programme is put into place, nothing can guarantee that the yen
will not fall again. |
Abstract |
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