When investors suddenly withdraw from markets, it has led in the past to macroeconomic crisis manifested as government default on debt, a recession, hyperinflation or some combination of these. Examples include the ongoing crisis in Europe, East Asia in 1997 and several Latin American countries before that. However, many of the earlier crises occurred in countries with fixed exchange rates or significant foreign exchange denominated debt. Paul Krugman has written a new paper arguing that in countries with floating exchange rates and low levels of external debt, the risks are low. The key, noted earlier by Paul De Graawe is that countries that borrow in their own currency have a lender of last resort - the central bank can always buy bonds and so the risks of default are lowered. A floating exchange rate provides a mechanism for macroeconomic imbalances to adjust, relieving the pressure on interest rates or wages.