Per Jacobsson Lecture: June 2014

This Per Jacobsson Lecture focuses on the new challenges in the management of financial crises that arise from the increased interconnectivity in national financial systems that have also become increasingly internationalized and thus internationally integrated. It brings in the lecturer's experience in three major financial crises in her three-decade-long career at Bank Negara Malaysia: the exchange rate mechanism crisis in the early 1990s, the Asian financial crisis in the late 1990s, and the recent global financial crisis. The lecture posits that the manifestation of a financial crisis is highly dynamic, evolving not only with the changes in the financial landscape, but also with the changes in the circumstances during different stages of the crisis. It identifies the different phases in the evolution of a crisis, each phase demanding a different policy solution. The lecture suggests indicative thresholds in the transition of a crisis to its next phase, with the aim of anticipating the next eventuality of the crisis and allowing for its effective management.