Coping with Capital Inflows: Experiences of Selected European Countries

By David Vávra, Inci Ötker, Barry Topf, Zbigniew Polanski

July 1, 2007

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David Vávra, Inci Ötker, Barry Topf, and Zbigniew Polanski. Coping with Capital Inflows: Experiences of Selected European Countries, (USA: International Monetary Fund, 2007) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper reviews the experiences of a number of European countries in coping with capital inflows. It describes the nature of the inflows, their implications for macroeconomic and financial stability, and the policy responses used to cope with them. The experiences suggest that as countries become more integrated with international financial markets, there is little room to regulate capital flows effectively. The most effective ways to deal with capital inflows would be to deepen the financial markets, strengthen financial system supervision and regulation, where needed, and improve the capacity to design and implement sound macroeconomic and financial sector policies. These actions will help increase the absorption capacity and resilience of the economies and financial systems to the risks associated with the inflows.

Subject: Capital inflows, Exchange rate flexibility, Exchange rates, Foreign exchange, Inflation targeting

Keywords: Country, Debt management, Exchange rate, Monetary policy, Regime vulnerability, WP, Yes

Publication Details

Pages:

44
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2007/190
Stock No:

WPIEA2007190
ISBN:

9781451867541
ISSN:

1018-5941

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