The decade of the nineties witnessed several bank and currency crises. The severity of the crises has motivated researchers to develop early warning systems in order to forestall similar crises. Such early warning systems typically involve some precise definition of a crisis and a mechanism for predicting it. A currency crisis is usually identified as an episode in which there is a sharp depreciation of the currency, a large decline in foreign reserves, a dramatic increase in domestic interest rates or a combination of these elements.