Now that we have completed an overview of how the Asian crisis evolved and the individual country stories, we are ready to review how that crisis created the conditions for the present global financial crisis.

History is a river of memory that runs from many streams, sometimes calm and other times cataclysmic. Like a decision tree chart, events fan out from turning points in history, setting the conditions for the next event. The factors that led to the Asian crisis were also the key reasons for the current crisis: globalization, technology, financial innovation and deregulation, but the last two factors were critical in the latter crisis. The build-up of leverage and globalization of trade and financial services could not have happened without financial innovation in new institutions and derivative products that changed the financial landscape. All these became possible because of financial deregulation.

In hindsight, we could see signs of the present crisis emanating from the Asian crisis. The lethal brew of large capital flows, high market volatility, leverage and investment banks were all there during the Asian crisis.