{
  "title": "The Multilateral Aspects of Policies Affecting Capital Flows",
  "publication": "Policy Papers, October 13, 2011",
  "sourceUrl": "https://www.imf.org/en/publications/policy-papers/issues/2016/12/31/the-multilateral-aspects-of-policies-affecting-capital-flows-pp4613",
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  "summary": "The crisis is prompting a reconsideration of capital flows and the policies that affect them. A breakdown in the domestic stability of a large country can spill over into stress in other countries and even to the global system as a whole.",
  "sections": [
    {
      "heading": "Executive summary",
      "content": "- The crisis is prompting a reconsideration of capital flows and the policies that affect them.\n- A breakdown in the domestic stability of a large country can spill over into stress in other countries and even to the global system as a whole.\n- The activities of global institutions and markets—some regulated and some not—can bear on the riskiness of flows.\n- National policies affecting capital flows can transmit multilaterally; this transmission has not been fully appreciated by national policymakers.\n- National policymakers may not have incentives to take full account of the cross-border effects of their policies.\n- The upward trend in the volume of capital flows can be expected to continue, making it ever more important to address the associated cross-border risks."
    },
    {
      "heading": "Purpose and scope of the paper",
      "content": "- Aim: to draw greater attention to the multilateral aspects of policies affecting capital flows.\n- Complementarity: Previous Fund work focused on policies of recipient countries, mainly emerging market economies (EMEs), and addressed the circumstances in which capital flow management measures (CFMs) would be appropriate.\n- This paper provides a complementary assessment of:\n  - regulatory and supervisory policies of advanced economies;\n  - large advanced economy monetary policy;\n  - the multilateral transmission of CFMs."
    },
    {
      "heading": "Key themes and findings",
      "content": "- Spillovers and systemic risk:\n  - Domestic instability in a large country can create stress that spills over to other countries and the global system.\n- Role of global institutions and markets:\n  - Both regulated and unregulated global institutions and markets influence the riskiness of capital flows.\n- Policy transmission and incentive problems:\n  - National policies affecting capital flows can have cross-border effects that are not fully internalized by national policymakers.\n  - Policymakers may lack incentives to take full account of these cross-border effects.\n- Emerging trend and policy urgency:\n  - The upward trend in the volume of capital flows is expected to continue, increasing the importance of addressing associated cross-border risks."
    },
    {
      "heading": "Policy implications and areas for attention",
      "content": "- Need for greater multilateral perspective in designing policies that affect capital flows.\n- Assessment and possible calibration of:\n  - regulatory and supervisory frameworks in advanced economies;\n  - monetary policy in large advanced economies;\n  - the design and potential cross-border effects of capital flow management measures (CFMs).\n- Importance of international cooperation and surveillance to manage cross-border externalities from national policies.\n\n---\n\n Content in this bundle\n\n- The Multilateral Aspects of Policies Affecting Capital Flows; IMF Policy paper; October 13, 2011\n  - The Multilateral Aspects of Policies Affecting Capital Flows; IMF Policy paper; October 13, 2011 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - The Multilateral Aspects of Policies Affecting Capital Flows; IMF Policy paper; October 13, 2011 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/policy-papers/issues/2016/12/31/the-multilateral-aspects-of-policies-affecting-capital-flows-pp4613"
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    "Published: October 13, 2011",
    "Series: Policy Papers",
    "The crisis is prompting a reconsideration of capital flows and the policies that affect them.",
    "A breakdown in the domestic stability of a large country can spill over into stress in other countries and even to the global system as a whole.",
    "The activities of global institutions and markets—some regulated and some not—can bear on the riskiness of flows.",
    "National policies affecting capital flows can transmit multilaterally; this transmission has not been fully appreciated by national policymakers.",
    "National policymakers may not have incentives to take full account of the cross-border effects of their policies.",
    "The upward trend in the volume of capital flows can be expected to continue, making it ever more important to address the associated cross-border risks.",
    "Aim: to draw greater attention to the multilateral aspects of policies affecting capital flows.",
    "Complementarity: Previous Fund work focused on policies of recipient countries, mainly emerging market economies (EMEs), and addressed the circumstances in which capital flow management measures (CFMs) would be appropriate.",
    "This paper provides a complementary assessment of:",
    "Spillovers and systemic risk:",
    "Role of global institutions and markets:",
    "Policy transmission and incentive problems:",
    "Emerging trend and policy urgency:",
    "Need for greater multilateral perspective in designing policies that affect capital flows.",
    "Assessment and possible calibration of:",
    "Importance of international cooperation and surveillance to manage cross-border externalities from national policies.",
    "**The Multilateral Aspects of Policies Affecting Capital Flows; IMF Policy paper; October 13, 2011**"
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