**1. Introduction**

Financial crises – in particular currency crises and banking crises – have occurred periodically. The IMF reported there were 158 currency crises and 54 banking crises during 1980–1995 [1]. The collapse of the Medici Bank in the 15th century is an example of a banking failure in the early days of the development of banking. The stories of bank failure continue for centuries. The latest series of financial crises started with the subprime mortgage crisis in the US in 2007–2008 which was then followed by the banking crisis in the UK in 2008–2009 and the Spanish banking crisis.

Along with the growing integration of financial markets, financial institutions such as banks have become increasingly vulnerable to financial turmoil elsewhere. Moreover, a financial turmoil that originates from a currency crisis often develops into a banking crisis, or vice versa, giving rise to what is known as a 'twin crisis'.

This chapter explains the origins of currency and banking crises and explores different approaches to identifying the crises, as well as their determinants.

The structure of the chapter is as follows. The next section explains the origins of currency and banking crises and how to mitigate them. The third and fourth section explores different approaches to identifying the crises and their determinants, respectively. The final section concludes the chapter.
