Economic of International Finance

Many countries have experienced some form of international financial crisis. A crisis might result in a
dramatic and sudden loss of a currency’s value in foreign exchange markets; an inability to repay
sovereign debt; and or capital flight where private investors quickly move substantial amounts of money
out of the country. Some illustrative examples include Mexico in 1994, Thailand in 1997, Iceland in
2008, and Mozambique in 2017. Some institutions have evolved to assist countries that are in crisis. For
example, the International Monetary Fund lends to countries that may find themselves running short of
international reserves, potentially staving off a currency crisis. It also has the Highly Indebted Poor
Countries Initiative aimed at reducing the debt burdens of low-income countries.
You are to identify and write an essay either about a specific financial crisis or about an international
institution designed to assist countries that fall into crisis.
There are three parts to this assignment, each with its own deadline.
Part 1
Identify a problem and describe it in a 90 – 100 word abstract. The problem must have a significant
international dimension. For example, roughly one third of all U.S. savings and loan associations failed
between 1986 and 1995. This was a major financial crisis for the United States, but there was no
significant impact on the foreign exchange value of the dollar or ability of the U.S. government to repay
its debts to foreigners.




Sample Solution

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