oussama94
05-28-2017, 23:16
Additional evidence of these practices could be observed in financial
institutions throughout Japan. After announcing a $136 billion total in questionable
and nonperforming loans in 1994, Japanese authorities admitted
to an alarming $400 billion total a year later. Coupled with a then crippled
stock market, cooling real estate values, and dramatic slowdowns in the
economy, investors saw opportunity in a depreciating yen, subsequently
adding selling pressure to neighbor currencies. When Japan’s asset bubble
collapsed, asset prices fell by $10 trillion, with the fall in real estate
prices accounting for nearly 65 percent of the total decline, which was
worth two years of national output. This fall in asset prices sparked the
banking crisis in Japan. It began in the early 1990s and then developed into
a full-blown systemic crisis in 1997 following the failure of a number of
high-profile financial institutions. In response, Japanese monetary authorities
warned of potentially increasing benchmark interest rates in hopes of
defending the domestic currency valuation. Unfortunately, these considerations
never materialized and a shortfall ensued. Sparked mainly by an
announcement of a managed float of the Thai baht, the slide snowballed as
central bank reserves evaporated and currency price levels became unsustainable
in light of downside selling pressure.
institutions throughout Japan. After announcing a $136 billion total in questionable
and nonperforming loans in 1994, Japanese authorities admitted
to an alarming $400 billion total a year later. Coupled with a then crippled
stock market, cooling real estate values, and dramatic slowdowns in the
economy, investors saw opportunity in a depreciating yen, subsequently
adding selling pressure to neighbor currencies. When Japan’s asset bubble
collapsed, asset prices fell by $10 trillion, with the fall in real estate
prices accounting for nearly 65 percent of the total decline, which was
worth two years of national output. This fall in asset prices sparked the
banking crisis in Japan. It began in the early 1990s and then developed into
a full-blown systemic crisis in 1997 following the failure of a number of
high-profile financial institutions. In response, Japanese monetary authorities
warned of potentially increasing benchmark interest rates in hopes of
defending the domestic currency valuation. Unfortunately, these considerations
never materialized and a shortfall ensued. Sparked mainly by an
announcement of a managed float of the Thai baht, the slide snowballed as
central bank reserves evaporated and currency price levels became unsustainable
in light of downside selling pressure.