Unconventional Monetary Policy in the Asian Financial Crisis

Abstract

Some of the policies central banks used during the Asian Financial Crisis had elements of unconventional monetary policy in that they involved the government buying assets that the private sector was unwilling to hold. We focus on public funding of bank recapitalizations in Thailand and the extraordinary purchase of equities in Hong Kong. Although it is important to calibrate these policies appropriately, we believe they helped to stabilize economies through channels that were not well understood at the time of the Asian crisis.