Crisis Impact
Financial Systems
The global crisis wiped a staggering US$50 trillion off the value of financial assets last year including US$9.6 trillion of losses in developing Asia alone. "This is by far the most serious crisis to hit the world economy since the Great Depression" (ADB President Haruhiko Kuroda).
Bolsters by reforms following the 1997-1998 Asian Financial crisis, the banking sector has been remarkably resistant to global shocks in 2008. The region’s banks report limited direct exposure to subprime and other toxic structured mortgage products.
However, stock markets have fallen dramatically and foreign capital inflows have slowed down. External financing, a key driver of economic expansion in many developing Asian countries, has been cut severely. Currencies in most developing countries in the region have depreciated against the US dollar.
While central banks ensured liquidity and eased credit and monetary policy, the banking and financial systems remain vulnerable. The longer the economic slowdown continues, the greater the risk to the region’s financial sector.
ADB and the ADB Institute (ADBI) have undertaken extensive analytical work on the financial impact of the crisis. View some of this work being done by
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