A key reason for the move by emerging markets from pegged exchange rates to floating exchange rates has been the rise in the importance of global capital flows and the extent to which emerging markets have participated in and been integrated within those capital flows. As stated, the rise in the importance of capital flows since the early 1980s reflects the wave of capital account liberalization and capital market integration that has taken place since that time. As a proportion of GDP, capital inflows to the emerging markets rose six-fold in the 1990s relative to the 1970s and 1980s, only to fall back in 1998 in the wake of the Asian and Russian crises. A similar trend has been seen in bank lending, which also fell back in the wake of these crises. The vulnerability of emerging markets to capital outflow and reversal has been a key focus for the emerging markets, and is likely to remain the case for some time to come. A key differentiation between the emerging markets and the industrial countries is the depth of their asset markets and their ability to absorb capital inflows and outflows without significant policy and economic distortion.