Economic of International Finance

Overview 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.      

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