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This checked the supply of credit, which in some cases caused a dramatic increase in lending rates to these countries relative to countries with a better credit rating. Exchange rate pressure grew and there have been acute currency crises, with collapsing exchange rates and thereby increased uncertainty. BIS Review 52/1999  4  It seems that the stronger the inflow of credit in the first phase, the more serious have been the consequences in the second, with declining production and rising unemployment. The reversal of capital flows, if these were channelled through the banks, has also created difficulties in the financial system. In many instances the financial system proved to lack the resilience to cope with the huge flows. The crisis that began in Asia in the autumn of 1997 had extensive contagious effects in other countries. Some of the latter were countries that had conducted a broadly judicious economic policy and were thus hit undeservedly. Singapore and Australia are two examples. Others were countries with their own economic problems. One was Russia, which was obliged to suspend foreign debt payments in August. This elicited contagious effects that hardly anyone had foreseen. The turbulence spread to financial capital’s citadel when an American hedge fund, Long-Term Capital Management, encountered extensive problems that had repercussions throughout the US capital market. Some of the crises that have begun in emerging markets have also been compounded by problems of a different sort. The Asian crisis, as well as other financial crises, included elements of nepotism and corruption.