Some significant disturbances in the past decade have challenged market participants’ and regulators’ understanding of risk and revealed weaknesses in risk-management tools and practices. For example, in 1997 and 1998, capital flows to a number of Asian countries were disrupted, with severe effects on their economies.
In 1998, the global financial system was rocked by the Russian debt default and the troubles of Long-Term Capital Management  1  The views I express here are my own and not necessarily those of other members of the Board. Pat White, of the Board’s staff, contributed to these remarks. BIS Review 46/2005  1  and its imitators.