II Introduction
Author:
Mr. Giovanni Dell'Ariccia
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,
Mr. Paolo Mauro
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,
Mr. Andre Faria
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,
Mr. Jonathan David Ostry
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,
Mr. Julian Di Giovanni
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,
Mr. Martin Schindler
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,
Mr. Ayhan Kose
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Mr. Marco Terrones
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Language:
English
Print Publication Date:
16 Dec 2008
Keywords:
OP; liberalization; capital; inancial globalization; control; volatility; emerging market crisis; crisis propensity; long-run economic growth; arbitrage opportunity; Emerging and frontier financial markets; Financial sector development

Abstract

Financial globalization—defined as the extent to which countries are linked through cross-border financial holdings, and proxied in this paper by the sum of countries' gross external assets and liabilities relative to GDP (see Box 2.1)—has made the interaction between international financial flows and domestic financial and macroeconomic stability an increasingly central issue for Fund surveillance.1 In discharging its mandate, a key issue for the IMF is to advise member countries about how they can reap the benefits of international financial integration while limiting its potentially harmful effects on macroeconomic volatility and crisis propensity. On various occasions—including in the context of discussions of recent Biennial Surveillance Reviews (IMF, 2004) and the Independent Evaluation Office's report on the Fund's approach to capital account liberalization (IEO, 2005)—Executive Directors have called upon staff to undertake further research into the issue of managing the risks associated with international financial integration in a way that maximizes the net benefits. The present paper focuses on policies and reforms that can be carried out by recipient countries (and especially emerging market and developing countries), with issues related to the role of macroeconomic and prudential policies in source countries being left to later analysis.2

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Cover Reaping the Benefits of Financial Globalization
Reaping the Benefits of Financial Globalization
ISBN:
9781589067486
ISSN:
0251-6365
Publication Date:
16 Dec 2008
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589067486.084
Pages:
52

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