The majority of data and analysis at Financial Services Briefing is available only to subscribers. Each week, a small share of content from the service is made available to non-subscribers. This week, the article of the week comes from Risk Briefing, a sister service to Financial Services Briefing.

Exchange-rate management was a contributor to the financial and economic crises that struck East and South-East Asia in the late 1990s. This time around, East Asia’s currencies are being managed differently. Notwithstanding an abundance of intervention, as reflected in growing reserves balances, these countries’ central banks have allowed the market to play a role in the currency’s value, and have not given speculators a threshold to bet against. The upshot is greater resilience in the event that boom turns to bust.

One way to assess flexibility in the currency regime is to consider the exchange-rate’s volatility against the “naturalness” of the distribution in its daily (or weekly, or monthly) changes. A combination of a volatility measure and a “naturalness” measure can give an indication of the underlying regime flexibility. On this measure, East Asian currency regimes are more flexible now than they were at the time of the 1990s crises.

Read more at Risk Briefing: “East Asian crisis resilience improves” (January 4th)