Capital Account Liberalization and Risk Management in India

Author/Editor: Sy, Amadou N. R.
Publication Date: October 01, 2007
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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 takes a closer look at the prudential and regulatory measures needed to prepare India's financial system to manage the risks arising from fuller capital account convertibility (FCAC). The paper contributes to the debate on FCAC in two ways. First, it reviews the potential and existing financial stability challenges to FCAC in India. Second it studies how prudential regulation and supervision is addressing these challenges. The main conclusion is that regulatory and supervisory measures alone are not enough and will need to be complemented by improvements in Indian banks' risk management and further development of the domestic capital markets.
Series: Working Paper No. 07/251
Subject(s): Capital account convertibility | India | Risk management

Author's Keyword(s): India | capital account | convertibility | liberalization | risk management
Publication Date: October 01, 2007
Format: Paper
Stock No: WPIEA2007251 Pages: 12
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