thing to do with your money is to leave it where it is, but our responsibility is to make sure the public knows that currency is readily available. and it is. we finished building up our currency inventory in august, and depository institutions are arranging to have a large amount of extra cash in their vaults as well. separately, the board has taken several steps to ensure bank and thrift customers continuous access to funding. first, we advised the industry to make the advance arrangements necessary to borrow at the discount window, and many have already done so. and we created an administrative structure to more easily serve the backup needs of credit unions. we also created a special liquidity facility to provide banks and thrift institutions access to funds at a predetermined price. this borrowing arrangement will be available as from 1 october. its creation sends a clear message : the fed will be there to provide liquidity should banks need it. that, in turn, will enable banks to offer their customers similar assurance. earlier this month, the federal reserve bank of new york announced several changes to its daily open - market procedures intended to ensure the smooth operation of financial markets around the century rollover. all of these actions have a common theme. they are meant to build confidence that the fed is determined to play its traditional role as a provider of liquidity in uncertain times. summary in sum, our systems are ready. we are working to build public confidence. we will be on the job constantly during the rollover period and we will be prepared for any problems that may arise. no one can guarantee the complete absence of isolated glitches, but americans should feel confident the federal reserve and our depository institutions have done everything that can be done to make the transition to the year 2000 as smooth as possible.

##duit followed in the contagion process, was not the same for all countries. initially, with countries in east asia, perceptions played an important part in the process. once the thai baht came under pressure in the middle of 1997, it did not take long before international investors discovered many similarities in the economies of korea, the philippines, indonesia and malaysia. the serious collapse of the russian financial system, and particularly the action taken by the russian government in the unilateral restructuring of its sovereign debt, gave rise to an indiscriminatory withdrawal of funds previously invested in sovereign debt of other emerging market governments. it was also noted at the time that the imf, the world bank, and governments of other countries were rather reluctant to provide the massive amount of assistance needed for propping up the russian balance of payments problem. the following quotation from a recent imf publication summarises the russian events of mid - 1998 : “ more important was the role of russia ’ s default as a defining event that challenged widely held views about the default risks associated with all emerging market investments, and the willingness and ability of the international community to provide assistance to countries in difficulty. ” ( world economic outlook and international capital markets, december 1998 ) the flight to high quality assets and, at a later stage, a major “ de - leveraging ” process of multinational investment institutions, reduced international capital flows in general, and therefore provided a second conduit for contagion. it is estimated at this stage that net private capital flows from the industrial countries to the developing and emerging markets, including countries in central and eastern europe “ in transition ”, declined from us $ 118 billion in 1997 to $ 70 billion in 1998. in the case of the asian countries, it changed from an $ 100 billion net inflow in 1996 to an $ 18 billion outflow in 1998. a third obvious conduit for the transfer of the economic ills of the east asian economies to other countries, and particularly countries with vulnerable balance of payments positions, is the deterioration of current account positions caused by the generally depressed world economic environment. the negative effects of this development are only now beginning to filter through to some of the poorer, developing countries in the world that do not have developed financial markets but are nevertheless dependent on the exports of basic commodities, metals and minerals. examples in southern africa can be found in botswana ( diamonds ), and zambia ( copper ). finally, the weakening or full collapse of