JOINT HIGH-LEVEL CONFERENCE BY THE BRAZILIAN AUTHORITIES AND THE IMF, RIO DE JANEIRO, BRAIL, MAY 26-27, 2011

IMF Seminars, January 1, 1901

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JOINT HIGH-LEVEL CONFERENCE BY THE BRAZILIAN AUTHORITIES AND THE IMF, RIO DE JANEIRO, BRAIL, MAY 26-27, 2011

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Bibliographic details

• Published: January 1, 1901

Event overview and objectives

• Date: MAY 26-27, 2011
• Location: Rio de Janeiro, Brazil
• Organizers: Brazilian authorities and the IMF
• Objective: Debate root causes of the pickup in capital flows to emerging market economies (EMEs), their impact, and appropriate policy responses across macroeconomic and prudential dimensions.
• Attendance: by invitation only.
• Contact: ManagingCapitalFlows2011@imf.org

Framing issues and recent context

• Capital flows to EMEs have resumed from the sharp decline after the global financial crisis and are projected to remain high, although volatile, in the coming years.
• Benefits of capital mobility listed:
  • Attract financing for productive investment in countries with limited savings.
  • Foster diversification of investment risk.
  • Contribute to development of financial markets.
• Concerns highlighted:
  • Flows may reflect interest rate differentials that could be partially reversed when policy interest rates in advanced economies (AEs) return to more normal levels.
  • Rapid reversal could occur if the global recovery falters and global risk aversion increases.
  • A history of "sudden stop" episodes suggests caution before interpreting current flows as a "structural break."
  • Large inflows can cause exchange rate appreciation pressures or overshooting, loss of monetary policy independence, and costly reallocation of productive resources if inflows are temporary.
  • Sudden surges can overwhelm domestic prudential frameworks and fuel asset price bubbles.

Major thematic sessions and questions addressed

• Session I — The Causes of the Recent Wave of Capital Inflows to Emerging Market Economies
  • Key questions:
  • What determines surges and volatility of capital inflows?
  • What role have macroeconomic policies in the U.S. and other advanced countries played?
  • Are there differences between types of flows?
  • Do recent inflows represent a structural “new normal” or reflect global imbalances?
  • Chair: Cristiano Romero, Valor Economico
  • Speakers: Joyce Chang (JP Morgan Chase), José Antonio Ocampo (Columbia University), Eduardo Loyo (BTG Pactual), Hyun Song Shin (Princeton University)

• Session II — Capital Inflows: Blessing or Curse?
  • Key questions:
  • What are the transmission channels between capital inflows and real and financial sectors in EMEs?
  • How to weigh theoretical benefits of capital flows against macroeconomic challenges: diminished competitiveness, inflation and overheating, asset price bubbles/financial fragilities?
  • How does experience differ by country characteristics (exchange rate regime, fiscal institutions, quality of supervision/regulation)?
  • Chair: Stephanie Flanders, BBC
  • Speakers: Paulo Nogueira Batista (Executive Director, IMF), Nicolás Eyzaguirre (IMF), Roberto Frenkel (University of Buenos Aires), John Williamson (Peterson Institute for International Economics)
  • Dinner speaker: Jagdish Bhagwati, Colombia University

• Session III — How Should EMEs Manage Rapid Inflows?
  • Key questions:
  • Policy options for managing capital inflows: macroeconomic policies, macroprudential policy, and capital controls.
  • Policy hierarchy among tools and systemic consequences to factor into country choices.
  • Chair: Zanny Minton-Beddoes, The Economist
  • Speakers: Kristin Forbes (Massachusetts Institute of Technology), Jonathan D. Ostry (IMF), Subir Vithal Gokarn (Deputy Governor, Reserve Bank of India), Olivier Jeanne (Johns Hopkins University)

• Policy Forum: Regional Perspectives on Managing Capital Inflows
  • Moderator: Adriana Arai, Bloomberg
  • Panelists: José De Gregorio (Governor, Central Bank of Chile), Turalay Kenç (Vice Governor, Central Bank of Turkey), José Uribe (Governor, Banco de la Republica de Colombia), Atchana Waiquamdee (Deputy Governor, Bank of Thailand)

Program mechanics and outputs

• Tentative conclusions to be presented by Nelson Barbosa Filho (Exec. Sec., Min. of Finance, Brazil) and Olivier Blanchard (IMF).
• Program included registration, speeches (e.g., Guido Mantega, Minister of Finance of Brazil; Alexandre Tombini, Governor, Banco Central do Brasil; Min Zhu, Special Advisor to the MD, IMF), breaks, and a press briefing.
• Emphasis on combining macroeconomic and prudential elements in policy responses to surges in capital inflows.

Content in this bundle

• 021411apdf (PDF)
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