Therefore, it should be noted that capital flows to emerging economies tend to become highly volatile, as do their bond prices. D.  Increasing cross-border banking activities between Japan and emerging Asia  Finally, I would like to consider cross-border banking activities. As mentioned earlier, the financial system in emerging Asia has traditionally been characterized as bank-dominant.
Note that the crisis erupted during a period of extraordinary price stability and macroeconomic stability. Indeed, some analysts have made an even stronger assertion, that an extended period of price and macroeconomic stability can blindside policy makers to seeing the festering financial instability underneath. We also learnt that no country is an island.