The Fund's Role Regarding Cross-Border Capital Flows

Policy Papers, November 15, 2010

Source details

Global capital flows have multiplied many times over in recent years, mainly between advanced economies but increasingly also to emerging markets, reflecting the general reduction in regulatory and informational barriers.
International asset positions now dwarf output, so global portfolio allocations and reallocations have profound effects on the world economy.
Recent boom–bust episodes illustrate the global and regional transmission of shocks:
- Global reach example: the transmission of the 2001 IT shock and the 2008 mortgage market shock from the United States.
- Regional significance examples: episodes in Asia, Latin America, and Central and Eastern Europe.
Cycles and reversals in cross-border capital flows are to be expected because these flows, more so than domestic ones, imply crossing informational barriers, currency and macroeconomic risks, and regulatory regimes.

The paper served as the basis for a preliminary discussion by the Board on the Fund's role in capital flows.
In the course of 2011, the Fund will carry out extensive analytical work, taking into account country experiences, to inform policy guidance on capital flows and help countries maximize the benefits from these flows while meeting any associated policy challenges.
The Fund will communicate on this work as it progresses.

Publication date: November 15, 2010
Subject tags: Bilateral surveillance, Capital controls, Capital flows, Developed countries, Emerging markets, Fund role, Multilateral surveillance

Source: The Fund's Role Regarding Cross-Border Capital Flows, November 15, 2010.

The IMF's Role Regarding Cross-Border Capital Flows; IMF Policy Paper; November 15, 2010
- The IMF's Role Regarding Cross-Border Capital Flows; IMF Policy Paper; November 15, 2010 (Markdown version)
- The IMF's Role Regarding Cross-Border Capital Flows; IMF Policy Paper; November 15, 2010 (PDF)