Emerging markets have moved from the frying pan to the fire. A panicked flight to safety, coupled with a catastrophic decline in economic activity, have transformed a virtuous cycle of rising reserves, strong currencies, and falling spreads into its mirror image. What policymakers should do in these circumstances is far from clear.

Clarity starts by recognising that this is not one emerging-market crisis but three. Least serious is the crisis in countries whose economies are still largely