A Systems Perspective on Financial Systems

International reserves and capital flows 381

market gradually accumulates to such a point that a crisis could be triggered readily.

Then speculators launch their attack on the exchange rate of the domestic currency by

dumping the currency. That makes the capital flow reverse its direction, and causes

the domestic currency to depreciate drastically; a currency crisis breaks out. It is often

the prelude of bank system crises.

In terms of bubble economy, The New Palgrave: A Dictionary of Economics (1987)

defines bubble economy as the price of an asset or the prices of a series of assets sud-

denly jumped higher in a continuous process; and at the start, ...