BEIJING, June 24 (Xinhua) -- With some emerging economies encountering capital outflow, market crash, currency devaluation and even rumors of a cash shortage in banks, some institutions are warning that the developing world could become the cradle of a new round of financial crisis.
But the worry of these institutions is not justified, as the emerging markets are unlikely to repeat the tragedy of the Asian financial crisis in the late 1990s.
From a historical perspective, the warning holds some water as the reversion of capital flow and plummeting stock markets in emerging countries did cause financial crises in the past.
In the past few weeks, funds are indeed fleeing emerging markets as the U.S. Federal Reserve hints to gradually withdraw its unprecedented stimulus measures.
The capital outflow also caused a rapid currency devaluation in many countries. India and Turkey were hit hard as their currencies fell to record lows against the U.S. dollar in the last week.
Even worse, stocks in the emerging markets continuously fell in the past month after hitting this year's high in May.
These problems, however, should not be taken as signs of a looming financial crisis in the emerging markets.
Childhood in an isolated sterile room
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