## Statement by the Managing Director on Recent Experiences in Managing Capital Inflows—Cross-Cutting Themes and Possible Policy Framework

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### Context and motivation
- Executive Board Meeting, March 21, 2011.
- Managing capital inflows is an area where "historically the Fund has found it difficult to find a clear consensus."
- The Managing Director emphasizes that policy advice cannot exclude a broad set of economic policies given the substantial benefits of getting inflow management right and the large economic and financial risks of getting it wrong.
- Recent surge in capital flows amid ample global liquidity increases the importance of providing members consistent, high-quality advice that promotes the common good.

### Need for a clear, board-supported policy framework
- The staff paper "illustrates well the variety of recent country responses to capital flows."
- The staff needs "a clear organizing framework to weigh the effects of alternative policies to manage inflows," and this framework "must be one that is supported by the Board."
- The Managing Director views the forthcoming discussion as a first step toward developing such a framework.

### Progress, challenges, and related work agenda
- Discussions indicate that "views on the substance of the issue have started to move a little closer."
- Staff analytical work and individual country case discussions have been "a great help."
- Anticipated challenges:
  - The "present state of the art" and differing country circumstances mean a fully shared view is still unlikely in the near term.
- Capital inflows work is part of a broader agenda, including:
  - Macroprudential policies.
  - Capital account liberalization.
- The overall aim is "to provide countries with a better roadmap for navigating an increasingly interconnected global financial system."

### Expectations for Board discussion and next steps
- The Managing Director seeks an "airing of views" and "a clarification of those areas where we do have broad consensus" to guide policy advice to countries.
- Acknowledges the framework may need to adapt "as we gain experience and as the state of the art evolves."
- Emphasizes urgency: "our members have to make decisions on these matters every day, and we owe it to them to give the best advice we can, even now."
- Expresses hope that, "with your support, we will make meaningful progress in this direction."

*Source: Statement by the Managing Director, Executive Board Meeting, March 21, 2011.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2011/_030811c.pdf_