The Mexican peso crisis was significant in that it was perhaps the first serious international financial crisis touched off by cross-border flight of portfolio capital. International mutual funds are known to have invested more than $45 billion in Mexican securities during a three-year period prior to the peso crisis. Required: a) Summarize the commonalities from Mexican Peso Crises, the Asian Crises, and the Argentine Peso Crises; b) In an integrated global financial system, a financial crisis in one country can easily be transmitted to other countries causing a global crisis. What measures would you propose to prevent such crises from occurring? c) Describe the incompatibility trinity and discuss its implications. d) Discuss the criteria for a good international monetary system
The Mexican peso crisis was significant in that it was perhaps the first serious international financial crisis touched off by cross-border flight of portfolio capital. International mutual funds are known to have invested more than $45 billion in Mexican securities during a three-year period prior to the peso crisis.
Required:
a) Summarize the commonalities from Mexican Peso Crises, the Asian Crises, and the Argentine Peso Crises;
b) In an integrated global financial system, a financial crisis in one country can easily be transmitted to other countries causing a global crisis. What measures would you propose to prevent such crises from occurring?
c) Describe the incompatibility trinity and discuss its implications.
d) Discuss the criteria for a good international monetary system.
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