Abstract Mexico's December 1994 peso crisis still has North America reeling from the shock. The U.S. $20 billion bailout package has helped to pay-off Mexico's short-term debt and stabilize its markets, but will do little for the structural problems that exist in the Mexican economy. Adler evaluates the causes of the crisis, presents four economic scenarios for the next year, and discusses alternatives to Mexico's present banking system: instituting a currency board or following Chile's central banking model. While Adler does not believe that Mexico needs a currency board, he makes the point that its policies must become more transparent if portfolio capital flows are to recover. This would be helped by a more formal international safety net.