It's time to set our clocks back in Asia. Not to 1997, as many are recommending, but to 1994.
Memories of the former year remain raw. Currencies had gone into free fall and current-account deficits exploded. Central bankers and International Monetary Fund officials scurried to contain the chaos. It's true that another 1997-like crisis is highly unlikely. Today, exchange rates are more flexible, foreign-currency debt is lower, banks are healthier, countries are sitting on trillions of dollars of reserves, and economies are far more transparent. The differences between 1997 and today trump the similarities.
The same can't be said of 1994, the year the Federal Reserve last reminded the world that its monetary policy is decided in Washington, not Bangkok, Jakarta or Seoul. Then-Fed Chairman Alan Greenspan doubled benchmark interest rates over 12 months, causing hundreds of billions of dollars in bond-market losses and helping set the Asian financial crisis in motion. The dollar's post-1994 rally made currency pegs impossible to maintain, leading to devastating devaluations across the region.