Lessons From The Peso Scare

It was a financial Desert Storm. A multinational bailout force, marshaled by the U.S. and armed with $52.8 billion, rode to the rescue of Mexico's economy. It was close, but with the stabilization of the peso and the sharp snapback of foreign stock markets, the world has now weathered its first liquidity crisis in securitized capital. Never before had a crisis occurred in a global financial system where individually owned mutual funds, not banks, played so significant a role in financing emerging countries. Never before had the world's top multilateral financial institutions, the International Monetary Fund, and the Bank for International Settlements, played the savior in this strange new land of people's capitalism.

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