Capital Account Convertibility and Risk Management in India
IMF Working Papers, October 1, 2007
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- Capital Account Convertibility and Risk Management in India
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Bibliographic details
- Authors: Amadou N Sy
- Published: October 1, 2007
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451868142.001
Overview
- Purpose: Examine prudential and regulatory measures needed to prepare India's financial system to manage the risks arising from fuller capital account convertibility (FCAC).
- Contribution:
- Reviews the potential and existing financial stability challenges to FCAC in India.
- Studies how prudential regulation and supervision is addressing these challenges.
- Main conclusion: Regulatory and supervisory measures alone are not enough and will need to be complemented by improvements in Indian banks' risk management and further development of the domestic capital markets.
Key Findings
- The paper identifies potential and existing financial stability challenges associated with FCAC in India.
- Prudential regulation and supervision are assessed for their effectiveness in addressing these challenges.
- Shortfall: Regulatory and supervisory measures by themselves are insufficient to manage the risks from FCAC.
- Recommended complementary measures include:
- Improvements in Indian banks' risk management.
- Further development of the domestic capital markets.
Subjects and Keywords
- Subject: Asset and liability management, Banking, Capital account convertibility, Credit risk, Market risk
- Keywords: bank, derivative instrument, interest rate, market, risk, WP
Content in this bundle
- _wp07251 - Section 1