The Asian financial crisis involves four basic problems or issues: (1) the role, operations, and replenishment of funds of the International Monetary Fund, (2) a shortage of foreign exchange in Thailand, Indonesia, South Korea and other Asian countries that has caused the value of currencies and equities to fall dramatically, (3) inadequately developed financial sectors and mechanisms for allocating capital in the troubled Asian economies, and (4) effects of the crisis on both the United States and the world. In 1998, the crisis that had been confined primarily to Asia appeared to be spreading to the world. The crisis was taking global dimensions. The Asian financial crisis was initiated by two rounds of currency depreciation that have been occurring since early summer 1997. The first round was a precipitous drop in the value of the Thai baht, Malaysian ringgit, Philippine peso, and Indonesian rupiah. As these currencies stabilized temporarily, the second round began with downward pressures hitting the Taiwan dollar, South Korean won, Brazilian real, Singaporean dollar, and Hong Kong dollar. Governments have countered the weakness in their currencies by selling foreign exchange reserves and raising interest rates, which, in turn, have slowed economic growth and have made interest-bearing securities more attractive than equities. The currency crises also has revealed severe problems in the banking and financial sectors of the troubled Asian economies. The International Monetary Fund has arranged support packages for Thailand ($17.2 billion), Indonesia ($42.3 billion), and South Korea ($58.2 billion). The packages include an initial infusion of funds with conditions that must be met for additional loans to be made available. The actual funds disbursed to date include only those from the IMF, World Bank, and Asian Development Bank. The United States has offered a line of credit from its Exchange Stabilization Fund for Indonesia and South Korea. Under separate initiatives, the U.S. Export-Import Bank and U.S. Department of Agriculture have allocated trade credits and loan guarantees to finance U.S. exports to the troubled Asian countries. The U.S. Congress is considering the Asian financial crisis within three broad legislative contexts. The first is in the financing and scope of the activities of the IMF. This includes legislation to provide the IMF with a $17.9 billion increase in its quotas or capital subscriptions and New Arrangements to Borrow. Questions are being asked, however, about the need for the additional funding, whether the IMF creates a moral hazard, and whether the IMF should attach different conditions to its support packages. The second legislative context is in the impact of the crisis on the U.S. economy and American financial institutions. Forecasters foresee a decline in U.S. economic growth of about 0.5 percentage point and an increase in the U.S. trade deficit of about $65 billion because of the crisis. The third context is the efforts of other countries, particularly Japan, in resolving the problem. Although Japan has pledged credits under the IMF support packages, its economy is in recession and it has not been performing its role as an engine of growth and absorber of exports from its neighbors in Asia. Rather, Japan's trade surplus is rising, particularly with the United States.