## A Modernized Approach to Managing the Risks in Cross-Border Capital Movements

_IMF Policy Discussion Papers, July 1, 1999_

## Source details

**Canonical URL:** [A Modernized Approach to Managing the Risks in Cross-Border Capital Movements](https://www.imf.org/en/publications/imf-policy-discussion-papers/issues/2016/12/30/a-modernized-approach-to-managing-the-risks-in-cross-border-capital-movements-3188)

## Other formats

- [Markdown version](/en/publications/imf-policy-discussion-papers/issues/2016/12/30/a-modernized-approach-to-managing-the-risks-in-cross-border-capital-movements-3188/index.md)
- [Structured JSON version](/en/publications/imf-policy-discussion-papers/issues/2016/12/30/a-modernized-approach-to-managing-the-risks-in-cross-border-capital-movements-3188/index.json)
- [Bundle manifest](/en/publications/imf-policy-discussion-papers/issues/2016/12/30/a-modernized-approach-to-managing-the-risks-in-cross-border-capital-movements-3188/bundle-manifest.json)

## Bibliographic details
- Authors: Inci Ötker, R. B. Johnston
- Published: July 1, 1999
- Series: IMF Policy Discussion Papers
- DOI: https://doi.org/10.5089/9781451972092.003

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### Summary and purpose
- Outlines a “modern” approach to managing risks in cross-border capital movements that is consistent with an environment of increased and liberalized capital flows.
- Emphasizes reducing the potential size of shocks associated with capital movements and increasing the resilience of the financial system to such shocks.
- States the approach is expected, over time, to reduce the need for recourse to capital controls.

### Key elements of the modern approach
- 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.
- Appropriate sequencing of liberalization.

### Expected outcomes
- Reduction in the potential size of shocks associated with capital movements.
- Increased resilience of the financial system when shocks occur.
- Gradual reduction in the need to use capital controls.

### Subjects and keywords
- Subject: Balance of payments; Capital controls; Capital flows; Exchange rate flexibility; Exchange rate policy; Exchange rates; Foreign exchange
- Keywords: capital; Capital controls; Capital flows; capital mobility; consistency of policy mix; control; Cross-border capital movements; exchange rate; Exchange rate flexibility; Exchange rate policy; Exchange rates; Global; interest rate; managed exchange rate arrangement; PDP; policy consistency; policy mix; prudential risk management; rates of return on asset; risk; risk exposure; risk weight; time consistency of exchange rate policy

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## Content in this bundle

- **A Modernized Appoach to Managing the Risks in Cross-Border Capital Movements - PDP/99/6**
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_Source: https://www.imf.org/en/publications/imf-policy-discussion-papers/issues/2016/12/30/a-modernized-approach-to-managing-the-risks-in-cross-border-capital-movements-3188_