Initially, it was mainly a sudden reversal in the inflow of short-term capital in the form of inter-bank and trade related financing arrangements that triggered the shortages in the market for foreign exchange. As the exchange rate depreciated and South African residents became more concerned about possible losses on foreign currency exposures, long-term foreign loans were repaid without replacement or extensions.
This is because globalisation of financial markets and consolidation of financial institutions have considerably raised the possible costs of dealing with actual systemic disturbances. To this end, the strengthening of market discipline as well as supervision would be essential, and the international community has made serious joint efforts.