In June 1997, a financial crisis broke out in Asia. The development process of this crisis was very complicated. By the end of 1998, it can be roughly divided into three stages: June to December 1997; January to July 1998; and July to the end of 1998.

The first stage: On July 2, 1997, Thailand announced that it would abandon the fixed exchange rate system and implement a floating exchange rate system, triggering a financial turmoil throughout Southeast Asia. On that day, the exchange rate of the Thai baht against the US dollar fell by 17%, and the foreign exchange and other financial markets were in chaos. Affected by the fluctuation of the Thai baht, the Philippine peso, Indonesian rupiah, and Malaysian ringgit have successively become the targets of international speculators. In August, Malaysia gave up efforts to defend the ringgit. The Singapore dollar, which has always been strong, also took a hit. Although Indonesia was the last country to be "infected", it has been hardest hit. In late October, international speculators moved to Hong Kong, the international financial center, targeting Hong Kong's linked exchange rate system. The Taiwan authorities suddenly abandoned the exchange rate of the New Taiwan dollar, which depreciated by 3.46% in one day, increasing pressure on the Hong Kong dollar and the Hong Kong stock market. On October 23, Hong Kong’s Hang Seng Index fell sharply by 1,211.47 points; on the 28th, it fell by 1,621.80 points, falling below the 9,000 point mark. Faced with the fierce attack by international financial speculators, the Hong Kong SAR government reiterated that it would not change the current exchange rate system, and the Hang Seng Index rose to reach the 10,000-point mark again. Then, in mid-November, a financial crisis also broke out in South Korea in East Asia. On the 17th, the exchange rate of the Korean won against the U.S. dollar fell to a record high of 1,008:1. On the 21st, the Korean government had to seek help from the International Monetary Fund, temporarily controlling the crisis. . But on December 13, the exchange rate of South Korean won against the US dollar dropped to 1,737.60:1. The Korean won crisis has also impacted the Japanese financial industry, which has large investments in South Korea. In the second half of 1997, a series of Japanese banks and securities companies went bankrupt. As a result, the Southeast Asian financial turmoil evolved into the Asian financial crisis.

The second stage: In early 1998, the financial crisis recurred in Indonesia. Faced with the worst economic recession in history, the prescriptions prescribed by the International Monetary Fund for Indonesia failed to achieve the expected results. On February 11, the Indonesian government announced that it would implement a linked exchange rate system in which the Indonesian rupiah maintains a fixed exchange rate with the US dollar to stabilize the Indonesian rupiah. This move was unanimously opposed by the International Monetary Fund, the United States, and Western Europe. The International Monetary Fund threatened to withdraw aid to Indonesia. Indonesia is in a major political and economic crisis. On February 16, the price of the Indonesian rupiah against the U.S. dollar fell below 10,000:1. Affected by this, the Southeast Asian foreign exchange market experienced another turmoil, with the Singapore dollar, Malaysian ringgit, Thai baht, Philippine peso, etc. falling one after another. It was not until Indonesia and the International Monetary Fund reached an agreement on a new economic reform plan on April 8 that the Southeast Asian currency market temporarily calmed down. The Southeast Asian financial crisis that broke out in 1997 put the Japanese economy, which was closely related to it, into trouble. The Japanese yen exchange rate fell from 115 yen to 1 U.S. dollar at the end of June 1997 to 133 yen to 1 U.S. dollar in early April 1998; in May and June, the yen exchange rate continued to fall, once approaching 150 yen to 1 U.S. dollar. pass. With the sharp depreciation of the Japanese yen, the international financial situation has become more uncertain, and the Asian financial crisis continues to deepen.

The third stage: In early August 1998, when the U.S. stock market was in turmoil and the Japanese yen exchange rate continued to fall, international speculators launched a new round of attack on Hong Kong. The Hang Seng Index has fallen to more than 6,600 points. The Hong Kong SAR government responded by using the Exchange Fund to enter the stock and futures markets, absorbing the Hong Kong dollars sold by international speculators, and stabilizing the foreign exchange market at HK$7.75 per US dollar. After nearly a month of hard work, international speculators have suffered heavy losses and cannot once again realize their attempt to use Hong Kong as a "super cash machine." While international speculators failed in Hong Kong, they also suffered a disastrous defeat in Russia. On August 17, the Russian Central Bank announced that it would expand the floating range of the ruble-dollar exchange rate to 6.0-9.5:1 during the year, postpone the repayment of foreign debt, and suspend the trading of government bonds. On September 2, the ruble devalued by 70%. This caused the Russian stock market and foreign exchange market to plummet, triggering a financial crisis and even an economic and political crisis. The sudden change in Russia's policy has devastated international speculators who invested huge sums of money in the Russian stock market, and triggered overall violent fluctuations in the foreign exchange markets of U.S. and European stock markets. If the Asian financial crisis was still regional before then, the outbreak of the Russian financial crisis shows that the Asian financial crisis has gone beyond the regional scope and has global significance. By the end of 1998, the Russian economy was still not out of trouble. In 1999, the financial crisis ended.

The outbreak of the financial crisis in 1997 was caused by many factors. Chinese scholars generally believe that it can be divided into direct triggering factors, internal basic factors and world economic factors.

Direct triggering factors include: (1) The impact of hot money in the international financial market. There are currently approximately US$7 trillion in liquid international capital worldwide. Once international speculators find out which country or region is profitable, they will immediately impact the currency of that country or region through speculation in order to obtain huge profits in the short term. (2) Some Asian countries have inappropriate foreign exchange policies. In order to attract foreign investment, they maintained fixed exchange rates and expanded financial liberalization, providing opportunities for international speculators.

For example, Thailand abolished controls on the capital market in 1992 before the country's financial system could be straightened out, allowing the flow of short-term funds to flow unimpeded and providing conditions for foreign speculators to speculate on the Thai baht. (3) In order to maintain a fixed exchange rate system, these countries have long used foreign exchange reserves to make up for deficits, leading to an increase in foreign debt. (4) The foreign debt structure of these countries is unreasonable. In the case of large medium-term and short-term debts, once the outflow of foreign capital exceeds the inflow of foreign capital, and the country's foreign exchange reserves are not enough to make up for the shortfall, the country's currency depreciation is inevitable.

Internal fundamental factors include: (1) High overdraft economic growth and the expansion of non-performing assets. Maintaining a high economic growth rate is the common aspiration of developing countries. When the conditions for rapid growth become insufficient, in order to continue to maintain the pace, these countries turn to borrowing foreign debt to maintain economic growth. However, due to poor economic development, by the mid-1990s, some Asian countries no longer had the ability to repay their debts. In Southeast Asian countries, the real estate bubble only resulted in bad debts and bad debts from bank loans; as for South Korea, because it is too easy for large companies to obtain funds from banks, once the company is in poor condition, non-performing assets immediately expand. The large number of non-performing assets has in turn affected investor confidence. (2) The market system is immature. One is that the government has excessively intervened in resource allocation, especially in loan investments and projects in the financial system; the other is that the financial system, especially the regulatory system, is imperfect. (3) Defects of the "export substitution" model. The "export substitution" model is an important reason for the economic success of many Asian countries. However, this model also has three shortcomings: first, when the economy develops to a certain stage, production costs will increase and exports will be suppressed, causing imbalances in the international balance of payments of these countries; second, when this export-oriented strategy When it becomes the development strategy of many countries, it will cause mutual squeeze between them; thirdly, the stepwise progress of products is a necessary condition for continuing to implement export substitution. It is impossible to maintain competitiveness only by relying on the cheap advantage of resources. After achieving rapid growth, these Asian countries have not solved the above problems.

World economic factors mainly include: (1) The negative impact of economic globalization. Economic globalization has brought closer and closer economic connections around the world, but the negative impacts resulting from it cannot be ignored, such as the intensification of interest conflicts between nation-states, the enhancement of capital mobility, and the increased difficulty in preventing crises. (2) Unreasonable international division of labor, trade and currency systems are unfavorable to third world countries. In the field of production, developed countries still produce high-tech products and high-tech products themselves, while the technical content of products gradually decreases towards less developed and underdeveloped countries. The least developed countries can only do assembly work and produce primary products. In the field of exchange, developed countries can purchase primary products at low prices and monopolize high prices to sell their own products. In the field of international finance and currency, the entire global financial system and institutions are also beneficial to financial powers.

The impact of this financial crisis is extremely far-reaching. It has exposed some deep-seated problems behind the rapid economic development of some Asian countries. In this sense, it is not only a bad thing, but also a good thing. It provides an opportunity to promote Asian developing countries to deepen reforms, adjust industrial structures, and improve macro management. Since the tasks of reform and adjustment are very arduous, it will take some time for the economies of these countries to fully recover. However, the basic factors for the economic growth of developing countries in Asia still exist. By overcoming internal and external difficulties, there is great hope for the improvement and further development of Asia's economic situation.

The Asian financial crisis that occurred in 1997 and 1998 was another major event that had a profound impact on the world economy after the world economic crisis in the 1930s. This financial crisis reflects the serious flaws in the financial systems of the world and various countries, including many relatively mature financial systems and economic operating methods that are considered to have been selected through historical development. Many of them have been exposed in this financial crisis. issues require reflection. This financial crisis has raised many new topics for us and raised the issue of establishing new financial rules and organizational forms. This book attempts to conduct research in this area. The central issue of this book's research is how to get rid of the centuries-old problems brought about by the currency supply system formed by various countries under the non-convertible paper money standard after the monetary system reform at the beginning of this century and the debt derivative mechanism formed between enterprises under the new situation. These economic problems include: (1) heavy debt burdens on enterprises, numerous bad debts in banks, and frequent financial and debt crises; (2) excessive money supply in society, excessive banking business, and increased difficulty in macro-control; (3) difficulties in government taxation , the fiscal crisis is mixed with the financial crisis; (4) Inflation entangles the social economy, bubble economies occur from time to time, economic fluctuations are frequent, and economic growth is often hindered; (5) Insufficient funds of enterprises bring operating difficulties, increasing the risk of bankruptcy and collapse Frequent corporate mergers and acquisitions reduce the stability of enterprises, increase unemployment, and are not conducive to economic growth and social stability. (6) Unequal international monetary relations have put a heavy burden on most countries in the world and caused many international economic problems. The deepest reasons for the above problems are the imperfection of the monetary system and the lack of full understanding of the new mechanisms of transaction activities between enterprises under the conditions of socialized mass production.

The idea of ????this book is to establish an authoritative intermediary system for enterprise transaction settlement - the national enterprise transaction intermediary settlement system, to free the debt chain between enterprises, and to eliminate the basis for the occurrence of bad debts between enterprises and banks, so as to avoid debt and financial crises. occurrence, reduce the harm of inflation and bubble economy, and promote stable economic growth. In this innovation process, there will also be innovations in national taxation and fiscal expenditure methods, reducing the occurrence of fiscal deficits. At the same time, it will also produce innovations in corporate systems, reduce corporate bankruptcy and mergers, and enhance corporate stability. In addition, international settlement methods will be innovated and the use of international currencies will be reformed. This process is not a simple governance of economic issues, but a correction of serious defects in the paper currency system, an innovation in the currency supply and circulation system, and a major change in the financial system. Moreover, this change brings about economic operation. Adjustments to many aspects of the mechanism.

The outbreak of the Asian financial crisis, although there are specific internal factors in each country:

The economy continues to overheat, the economic bubble expands, the blindness of introducing foreign capital - excessive short-term foreign debt, The banking system is not healthy

There is collusion between banks and enterprises and large corporate liabilities. The crisis also has its external causes: the "evil" behavior of international speculators.

But people should also We will further pursue the root cause and find the essential factors that generate the crisis - the trend of modern financial economy and economic globalization.

Liu Shibai believes that financial crisis is an inherent part of the capitalist economic crisis. The world's economic panic from 1929 to 1933 was preceded by a severe financial crisis. The Mexican financial crisis in 1994 and the East Asian financial crisis in 1997 first occurred in the capitalist world. It can be seen that the financial crisis has its institutional roots and is a crisis of capitalism. The possibility of financial crisis exists in the spontaneous monetary and credit mechanism inherent in the market economy. Once financial activities

get out of control and contradictions in currency and capital lending intensify, financial crises will manifest. The modern market economy characterized by highly developed financial activities is itself a high-risk economy, containing the possibility of financial crises.

Economic globalization and integration are another major feature of the contemporary world economy. Economic globalization is the highest form of development of market economy beyond national borders. After World War II, with the further development of commodity relations between countries, countries have become more interdependent economically. The frequent international flow of goods, services, capital, technology, and knowledge reflects the trend of economic globalization

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becomes more distinct. The globalization of financial activities is an important reason for the new allocation of contemporary resources in the world and the rapid development of economically backward countries and regions. However, the explosive development of international credit and investment has deepened its inherent contradictions and led to financial crises.

It will inevitably break out in those weakest links where the system is not sound.

To sum up, the modern market economy not only has crises caused by overproduction of commodities and insufficient demand, but also

There are also out-of-control financial credit behaviors and excessive use of new financial instruments. Financial crisis caused by excessive speculation in the capital market. In the capitalist world, this crisis in the market operating mechanism is catalyzed and intensified by the basic system.

Financial crises are not only inevitable in capitalist countries, but may also occur in socialist market economic systems.

The imperfection of the financial system and the out-of-control financial activities are endogenous factors of the financial crisis. Because of this, in the current institutional transformation of our country, people should attach great importance to and effectively build a market economic system regulated by the government, especially

making great efforts to improve the financial system. system, and vigorously enhance the ability to prevent endogenous and exogenous financial crises.

Summary: After the outbreak of the Southeast Asian financial crisis, people conducted extensive and in-depth discussions on the causes of the crisis.

Pointed out the internal and external reasons for the crisis, and Liu Shibai It further pointed out the underlying reason, that is, the modern currency and credit mechanism led to the outbreak of the crisis. As long as the modern market economy exists, the currency and credit mechanism inherent in the market economy may lead to financial crises. However, it only occurs in the weakest countries with imperfect systems.

This is no exception in socialist market economy countries. Even so, we can prevent financial crises by improving the financial system. Liu Shibai pointed out a way to prevent financial crises.

The fixed exchange rate system means that the monetary authority basically fixes the exchange rate of the domestic currency against other currencies, and limits the fluctuation range to a certain and small range. The exchange rate under this system is controlled by the monetary authority and fluctuates within the legal range, so it is relatively stable.

The floating exchange rate system generally refers to the free floating exchange rate system, which is relative to the fixed exchange rate system. It means that a country does not regulate the fluctuation range of the exchange rate between its own currency and foreign currencies, nor is it responsible for maintaining the exchange rate. The obligation to limit fluctuations and allow the exchange rate to float freely with changes in supply and demand in the foreign exchange market.

Under this system, foreign exchange has completely become a special commodity in the international financial market, and the exchange rate has become the price for buying and selling this commodity.

Different exchange rate systems behave differently when faced with the impact of international capital flows on their own economies. Generally speaking, when choosing a floating exchange rate, market forces mainly control the cross-border flow of capital; while choosing a fixed exchange rate requires the government to control the cross-border flow of capital.

The "Triple Paradox" theory holds that the three goals of monetary policy independence, exchange rate stability and free capital flow cannot be achieved at the same time, but only two can be achieved at the same time. In fact, each country can only choose two goals that are beneficial to itself.

At present, there is no conclusion yet on which is better between fixed exchange rate system and floating exchange rate system.

The benefits of implementing a floating exchange rate system are: (1) a floating exchange rate system can ensure the independence of monetary policy; (2) a floating exchange rate can help mitigate external shocks; (3) intervention will be reduced, and the exchange rate will be Market decisions are more transparent; (4) There is no need to maintain huge foreign exchange reserves. However, people also have some concerns about floating exchange rates: (1) Under a floating exchange rate system, exchange rates tend to experience large and excessive fluctuations, which may be detrimental to trade and investment; (2) Because exchange rates float freely, people may engage in speculative activities; (3) ) The floating exchange rate system puts forward higher requirements on a country's macroeconomic management capabilities and the development of financial markets. In reality, not every country can meet these requirements.

The benefits of a fixed exchange rate system are: (1) the uncertainty of exchange rate fluctuations will be reduced; (2) the exchange rate can be regarded as a nominal anchor (nomina l a n c h o r ), promoting the stability of price levels and inflation expectations . However, the fixed exchange rate system also has some shortcomings: (1) It can easily lead to overvaluation of the local currency, weaken the competitiveness of local export commodities, and cause unsustainable long-term current account imbalances; (2) At the same time, rigid exchange rate arrangements may be considered Implicit exchange rate guarantees, thereby encouraging short-term capital inflows and unhedged external borrowing, harm the health of the local financial system. Under a fixed exchange rate system, a country must either sacrifice the independence of its own monetary policy or restrict the free flow of capital, otherwise it will easily trigger a currency and financial crisis. Such as the European exchange rate mechanism crisis in 1992-1993, the Mexican peso crisis in 1994, the Asian financial crisis in 1997, and the Russian ruble crisis in 1998. These crisis-affected countries all adopted fixed exchange rate systems and at the same time relaxed controls on capital accounts to varying degrees.

To find a balance between a floating exchange rate system and a fixed exchange rate system, a better choice is a managed floating exchange rate system (manage d f l o a t i n g ). The implementation of this exchange rate system can rely on three tools: first, monetary policy tools; second, the central bank's hedging intervention in the foreign exchange market; third, a certain degree of capital control. This system can not only maintain the independence of monetary policy, but also allow the exchange rate to have a certain degree of flexibility to respond to internal and external shocks. At the same time, it can also selectively partially liberalize the capital account to keep capital flows under control. . At present, my country implements a managed floating exchange rate system.

Reference material: Hexun.com