IMF Working Papers

Managing Large-Scale Capital Inflows: The Case of the Czech Republic, Poland and Romania

By Leonor Keller, Ibrahim Chowdhury

May 1, 2012

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Leonor Keller, and Ibrahim Chowdhury. Managing Large-Scale Capital Inflows: The Case of the Czech Republic, Poland and Romania, (USA: International Monetary Fund, 2012) accessed December 6, 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

Many emerging market economies have in the recent past experienced a surge in capital inflows that may threaten their economic and financial stability. The IMF in early 2011 proposed a framework intended to guide Fund advice to policymakers on how to best respond to such inflows, including both macroeconomic instruments and so-called capital flow management measures (CFMs). The paper applies this framework to three countries that have experienced elevated capital inflows after the onset of the 2008 global financial crisis - the Czech Republic, Poland, and Romania. It finds that the evaluation of the macroeconomic criteria as prescribed by the framework does not support the use of CFMs, but instead advocates macroeconomic policies as the first line of defense against large-scale capital inflows. This finding is by and large consistent with the IMF’s policy advice given to country authorities in the context of surveillance missions.

Subject: Balance of payments, Capital controls, Capital inflows, Central banks, Exchange rates, Foreign exchange, Inflation, Prices, Reserves accumulation

Keywords: Assessment methodology, Capital controls, Capital inflows, Capital inflows framework, Eastern Europe, Economy, Exchange rate, Exchange rates, Global, IMF Policy recommendation, IMF report, IMF staff, Inflation, Monetary policy, Policy advice, Reserves accumulation, WP

Publication Details

  • Pages:

    25

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

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  • Series:

    Working Paper No. 2012/138

  • Stock No:

    WPIEA2012138

  • ISBN:

    9781475503920

  • ISSN:

    1018-5941