Was the Asian crisis a classic currency crisis or was it a banking crisis? Currency crises are about flight of capital, both domestic and foreign, and they arise because central banks do not have enough foreign currency to defend their national exchange rate. Nobel Laureate Paul Krugman was amongst the first to question the validity of the Asian Miracle by asserting that Asian growth was more a product of perspiration than inspiration. In January 1998 he was also amongst the first to point out that any analysis of the Asian crisis ‘needs to focus on two issues normally neglected in currency crisis analysis: the role of financial intermediaries (and of the moral hazard associated with such intermediaries when they are poorly regulated), and the prices of real assets such as capital and land’. In other words, the Asian crisis was a banking crisis on top of the currency crisis, where asset bubbles and moral hazard played important roles.