JOURNAL OF THE JAPANESE AND INTERNATIONAL ECONOMIES 12, 535–542 (1998) ARTICLE NO. JJ980418 PANEL DISCUSSION Recent Currency Crises in East Asia Panelists: Barry Eichengreen, Takatoshi Ito, Masahiro Kawai, and Richard Portes 1 1. PANELISTS’ INITIAL REMARKS Barry Eichengreen In his opening remarks, Eichengreen flagged three issues: the rationale for international support for countries in crisis, the problem of moral hazard, and recent criticisms of IMF programs. On the first issue he posed the question of whether the international community’s response to the crisis in East Asia was justified. He argued that the international intervention was in fact justified on two grounds. First, it is important to prevent a crisis in a particular country from growing unnecessarily severe. When a country accumulates a large amount of short-term foreign-currency-denominated debt, the capacity of its central bank to act as a lender of last resort is vitiated; there will then be a strong case for international assistance to provide those lender-of-last-resort services. International assistance can thereby help cushion the transitional recession that is inevitable when a large share of a nation’s resources must be redeployed from the nontraded to the traded goods sector, as is typically the case for an emerging market when foreign borrowing is interrupted and a large current account deficit has to be eliminated. The second rationale for assistance is to limit the contagious spread of problems to other countries that compete with the crisis country in international markets or share macroeconomic and finan- cial characteristics that lead investors to suspect similar problems. The usual objection to international intervention is on the grounds of 1 The views expressed by Barry Eichengreen and Masahiro Kawai do not represent those of the International Monetary Fund or the World Bank, respectively. 535 0889-1583/98 $25.00 Copyright  1998 by Academic Press All rights of reproduction in any form reserved.