A Modernized Approach to Managing the Risks in Cross-Border Capital Movements
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Summary:
This paper outlines a “modern” approach to managing risks in cross-border capital movements that is consistent with an environment of increased and liberalized capital flows. Key elements of this approach include: a consistent monetary and exchange rate policy mix to avoid incentives for volatile capital flows; prudential management of the specific risks in capital flows; supporting financial sector reforms; and appropriate sequencing of liberalization. The approach can reduce the potential size of the shocks associated with capital movements and increase the resilience of the financial system to such shocks when they occur; overtime, it is expected to reduce the need for recourse to capital controls.
Series:
Policy Discussion Paper No. 1999/006
Subject:
Balance of payments Capital controls Capital flows Exchange rate flexibility Exchange rate policy Exchange rates Foreign exchange
English
Publication Date:
July 1, 1999
ISBN/ISSN:
9781451972092/1564-5193
Stock No:
PPIEA0061999
Pages:
24
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