The subprime crisis and its consequences have led to the most severe financial crisis since the Great Depression (IMF, 2009). In this paper, we focus our attention on two main questions. First, we analyze the transmission of the current financial crisis to emerging economies. Two main features distinguish the current episode from the crises of the late 1990s and early 2000s. On the one hand, the main trigger of the crisis is a shock originated in the financial sector of advanced countries. After an initial period of resilience, the financial turmoil in advanced economies hit emerging markets in late 2008. On the other hand, this crisis is characterized by an exceptional synchronization at a worldwide level. In other words, the subprime crisis has led to a global crisis affecting both financial systems across the globe and economic activity in virtually all countries. Emerging markets have been hit by two major shocks in external drivers: the “sudden stop” of capital inflows and the collapse in export demand. Second, taking into account the fact that many financial crises have long-term damages to the path of economic growth (Cerra and Saxena, 2008; Furceri and Zdzienicka, 2011), this paper studies the responses of policy makers in emerging markets to the financial crisis.