5 Asian economies consequently tend to show high degrees of economic volatility. Asian economies are in addition at risk of possible financial and foreign exchange market unrest owing to large in- and outflows of global funds. This risk accompanies their pursuit of economic development on the principle of increased market opening and liberalization policies.
While causing domestic liquidity to swell, excessive inflows of global funds may at the same time generate steep rises in the prices of assets such as shares, bonds and real estate. In the event of what is termed a sudden stop, i.e.