The paper looks at why a country might switch from a fixed exchange rate to a flexible one during a financial crisis. The researchers studied the Bank of Korea's actions during the East Asian crisis and found that the fixed exchange rate collapsed because the central bank ran out of foreign reserves. This happened because the central bank lent a lot of foreign currency to domestic banks, which drained the reserves. By creating a model, the researchers showed that this depletion of reserves led to the change in the exchange rate regime. The model accurately reflected the economic downturn in Korea during the crisis.