The past decade has included the banking collapses in the Nordic countries, the Mexican crisis of 1994, the Asian crisis of 1997, Russia in 1998 and Japan’s problems stretching over much of the decade. During the same period, we have heard disturbing news of many individual companies and markets, the most celebrated ones being the demise of Barings and the near demise of LTCM.
Looking over the experience at home and abroad, I do not think it is possible to say that the risk of serious financial instability has either increased or decreased in the course of the past century. The only reasonable working assumption is that the risks of serious financial disturbance are about the same as they always have been.