This year marks the tenth anniversary of the beginning of the Asian financial crisis, a collapse brought on by macroeconomic imbalances that exposed fundamental weaknesses in Asia’s corporate and financial sectors. The sequence of events that began with the Thai baht’s collapse in July 1997 ultimately cost the region tens of billions of dollars and led many observers to speculate about an impending “lost decade” in Asia.

Today, after a remarkable ten years of transformation, Asia’s financial system is substantially deeper and more robust than it was in 1997. Sitting atop an enormous rising economic tide, it is poised to benefit from a host of factors, including the rise of China and India, the reemergence of Japan, robust intraregional trade, enormous infrastructure-financing needs, and the opportunities presented by increasingly powerful Asian sources of cßapital. Asia appears set to play an important role in the world’s financial system over the coming decade—a true third partner in the global triad, along with Europe and the United States.

But it would be foolhardy to believe that Asia has been immunized against imbalances, shocks, and dislocations. The sheer pace of growth and financial innovation across the region makes it inevitable that imbalances will build...