Asian liquidity: What a difference a decade makes

The recent credit crisis highlights the crucial link between economic progress and robust capital markets. When the Asian financial crisis hit in 1997-98, the absence of strong local capital markets meant that countries in the region were more exposed to the effects of the meltdown than industrialised market economies. The crisis pushed Asian nations into recession, led to a sharp rise in unemployment, and dragged millions of people back into poverty.

More than a decade later, as we watched the global financial crisis spread into the real economy and witnessed the destructive impact of a financial and economic catastrophe, Asian nations managed to avoid the worst effects of the turmoil. The reason since the Asian...