Moreover, from the perspective of safety nets, those economies have accumulated substantial foreign reserves and backstops were put in place, such as the Chiang Mai Initiative – a swap agreement network to make short-term foreign currencies available among participating countries. Owing to these developments, emerging economies have become more resilient against possible capital outflows.
Moreover, the improvement in the financial positions of banks had taken place in an environment characterised by ample market liquidity across a number of global financial markets, which led to almost no liquidity risk premia being priced in. As the crisis is still unfolding, we cannot tell with certainly how our economic and financial systems will function in the future.