As Morris Goldstein has remarked, ‘There's nothing like a major crisis to focus people's minds on why it is important to improve the international financial architecture’ (Goldstein 1998: 67). New institutions of international governance have often resulted from crises. The Bretton Woods order was designed by policy-makers who had sharp memories of the gold standard's collapse and the competitive depreciations of the 1930s. The unexpected demise of fixed parities under Bretton Woods and subsequent exchange rate volatility convinced Europeans that monetary stability required a new regional monetary design.

The Asian economic crisis, which moved rapidly from a regional disturbance to a global threat, certainly qualified as ‘major’. It followed currency and financial crises in the 1990s that have repeatedly surprised those who believed that liberated capital flows would stabilise rather than disrupt the world economy. After the Mexican peso crisis, itself a sharp break in the surge of capital to emerging markets, one observer predicted with confidence that ‘it is difficult to imagine another shock on the scale of Mexico's in the near future’ (Cline 1996: 13). Yet less than two years after Mexico's recovery, the international economy was engulfed in an even more serious and widespread financial crisis, ‘the most severe regional financial disruption since the Latin American debt crisis of 1982 and perhaps since the Creditanstalt default of 1931’ (Chote, quoted in CEPR 1998: 2).