Many countries have experienced serious banking and/or currency (exchange rate or balance of payments) problems in recent years with high costs to their own countries and others. A study by the International Monetary Fund (IMF) reported that more than 130 of the IMF’s 180- plus member countries had experienced serious banking problems between 1980 and 1995 and this was even before the recent East Asian banking crises (Lindgren, Garcia, and Saal 1996). A map of countries experiencing banking crises is shown in Figure 1. The authors’ define serious problems to include banking crises that involve bank runs, collapses of financial firms, or massive government intervention, as well as less damaging but extensive unsoundness of institutions. Currency crises were more frequent than banking crises. They are typically defined as historically large depreciations in exchange rates and/or large declines in foreign reserves. Another IMF study of 53 industrial and developing countries identified 158 currency crises and 54 banking crises in approximately the same time period (IMF, 1998a). Many countries suffered more than one such crisis during this period. A third study by Kaminsky and Reinhart (1996 and 1999) of 20 countries from 1970 to 1995 identified 25 banking crises and 71 currency crises.