Has Asia really escaped the subprime crisis?

The Asian financial system has so far proved to be fairly resilient to the US subprime crisis. Asian exposure to opaque asset-backed securities has been well below that of other (primarily Western) economies. However, the region remains vulnerable to asset price volatility in general. In addition, policy options for Asian central banks are becoming increasingly constrained by domestic inflationary pressures and slowing external demand. This suggests that Asian policy makers will face an increasingly bumpy ride in the year ahead.