Abstract: This chapter examines whether East Asia remains vulnerable to financial crises. Section 9.2 reminds us that this question would have received a negative answer even as late as in 1996. Section 9.3 describes how the East Asian countries have endeavored since 1998 to protect themselves from a re-run of the traumatic events that are still haunting them. In particular, it argues that the spectacular build-up of foreign exchange reserves reduces, but does not eliminate, the odds of a crisis. Based on the three generations of crisis models, Section 9.4 seeks to identify the remaining vulnerabilities. The last section wraps up the previous conclusions and examines the policy options.

Keywords: financial crises, East Asian countries, foreign exchange reserves, crisis models,