This burgeoning global system has been demonstrated to be a highly efficient structure that has significantly facilitated cross-border trade in goods and services and, accordingly, has made a substantial contribution to standards of living worldwide. Its efficiency exposes and punishes underlying economic weakness swiftly and decisively. Regrettably, it also appears to have facilitated the transmission of financial disturbances far more effectively than ever before.
As I testified before this Committee three years ago, the then emerging Mexican crisis was the first such episode associated with our new high-tech international financial system. The current Asian crisis is the second. We do not as yet fully understand the new system’s dynamics.