Before the Asian financial crisis in 1997, the economies of Southeast Asian countries had been experiencing rapid growth for 10 consecutive years.

Along with rapid economic growth, bank credit in these countries has increased at a faster rate, and short-term foreign debt has reached unprecedented levels.

A considerable part of it is invested in real estate.

Increased investment has led to asset price inflation (mainly in Thailand and Malaysia).

In addition, the lack of flexibility in the exchange rate system has also resulted in a large amount of foreign debt without considering exchange rate risks.

These all paved the way for the crisis to occur.

The crisis first broke out in Thailand.

From March to June 1997, 66 financial companies in Thailand secretly received large amounts of liquidity support from the Bank of Thailand.

In addition, there has been a large amount of capital fleeing Thailand.

The Central Bank of Thailand used all its foreign exchange reserves to maintain the peg, but it still failed.

On July 2, the Ministry of Finance and the Central Bank of Thailand announced that the Thai currency will implement a floating exchange rate system, and the value of the Thai baht will be determined by the market, abandoning the 14-year package exchange rate system between the Thai currency and the US dollar that has been implemented since 1984.

This marked the official outbreak of the Asian financial crisis.

Soon, the crisis began to spread from Thailand to other Southeast Asian countries, and from the foreign exchange market to the stock market.

On July 9, the Malaysian stock market index fell to an 18-month low.

The central banks of the Philippines, Malaysia and other countries directly intervened in the foreign exchange market to support their currencies.

On July 11, Indonesia and the Philippines expanded the floating range of their currencies.

On August 4, the governor of the Bank of Thailand was forced to resign, and the new central bank governor Chaiwat took office.

On August 13, the Indonesian Ministry of Finance and Bank Indonesia jointly announced that they would abandon the exchange rate policy of pegging the US dollar and implement a free floating exchange rate system. The Indonesian rupiah fell sharply by 55%.

As the crisis developed, the international community, led by the International Monetary Fund, began to provide large amounts of assistance to the countries in crisis.

However, the financial markets in these countries are still deteriorating, which has also affected the Hong Kong and US markets.

While crisis countries took measures to stabilize financial markets and financial systems, they also began to carry out economic and financial reforms.

On August 11, the International Conference on Assistance to Thailand hosted by the International Monetary Fund was held in Tokyo.

After consultations, it was determined to provide approximately US$16 billion in financial assistance to Thailand to stabilize Thailand's economy and financial market order.

The Hong Kong SAR government used the Exchange Fund for the first time to provide US$1 billion to participate in Thailand's loan program.

On September 1, the Philippine stock market continued to fall, with the Philippine Stock Composite Index breaking through the 2,000-point defense line and finally closing at 1,975.20 points, the lowest record in four years.

On September 4, the exchange rate of the Korean won against the US dollar fell to the lowest point since South Korea implemented the market average exchange rate in March 1990. The closing price was 906 won per US dollar.

On October 7, the Philippine peso fell to a new historical low, and the average trading price throughout the day fell below the 35 peso mark for the first time to 1 U.S. dollar, reaching 35.573 pesos for 1 U.S. dollar.

On October 24, Thailand issued an emergency decree to support the restructuring of the financial sector.

October 28 was the darkest day for the world stock market that year, with both the U.S. and Hong Kong stock markets falling below historical records.

Hong Kong's Hang Seng Index fell 1,438 points to close at 9,059 points. This was the first time the Hang Seng Index fell below 10,000 points since 1996.

On October 31, Indonesia announced a bank resolution package; it closed 16 commercial banks and implemented limited guarantees for deposits in other banks.

On November 1, International Monetary Fund President Camdessus announced that the international community would provide Indonesia with an emergency assistance loan of US$28 billion to help it stabilize the domestic financial market.

In mid-November, the Thai government changed.

On November 18, the Central Bank of Korea announced that it would provide 2 trillion won to commercial banks and securities companies through repurchase agreements to ease the shortage of funds.

On December 23, the World Bank approved a US$3 billion loan to South Korea as part of the IMF's financial assistance to help South Korea get out of the crisis.

In 1998, after initial turbulence, financial markets in some countries began to stabilize.

Governments in most crisis countries have stepped up efforts to reform their economic and financial systems.

But in Indonesia, the economic crisis turned into a social and political crisis that ultimately led to Suharto's ouster and a change of government.

Malaysia has implemented foreign exchange controls, which has been criticized and criticized by Western countries.

In January, the South Korean government reached an agreement with foreign creditors to restructure short-term debt.

On January 26, the Indonesian Bank Restructuring Agency was established and announced the implementation of comprehensive guarantees.

In February, Indonesian President Suharto dismissed Jiwan Dono, the governor of the Indonesian Central Bank, and appointed Central Bank Director Sabirin as the new governor.

On March 31, the South Korean government decided to fully open the financial industry to foreign investment.

On May 4, Chaiwatt, the governor of the Bank of Thailand, announced his resignation.

On May 17, all banks ceased operations after the riots in Jakarta, Indonesia on the 14th.

On May 21, President Suharto stepped down.