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A Modernized Approach to Managing the Risks in Cross-Border Capital Movements
Author:
Ms. Inci Ötker null

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Mr. R. B. Johnston
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Series:
IMF Policy Discussion Papers
Volume/Issue:
Volume 1999: Issue 006
Language:
English
Publication Date:
01 Jul 1999
DOI:
https://doi.org/10.5089/9781451972092.003
ISBN:
9781451972092
ISSN:
1564-5193
Pages:
24
Keywords:
PDP; exchange rate; interest rate; capital; risk; control; Cross-border capital movements; prudential risk management; consistency of policy mix; time consistency of exchange rate policy; policy mix; policy consistency; managed exchange rate arrangement; rates of return on asset; risk exposure; risk weight; capital mobility; Capital flows; Capital controls; Exchange rates; Exchange rate policy; Exchange rate flexibility; Global
Legal-disclaimer:
This Policy Discussion Paper should not be reported as representing the views of the IMF. The views expressed in this Policy Discussion Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Policy Discussion Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
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This paper outlines a “modern” approach to managing risks in cross-border capital movements that is consistent with an environment of increased and liberalized capital flows. Key elements of this approach include: a consistent monetary and exchange rate policy mix to avoid incentives for volatile capital flows; prudential management of the specific risks in capital flows; supporting financial sector reforms; and appropriate sequencing of liberalization. The approach can reduce the potential size of the shocks associated with capital movements and increase the resilience of the financial system to such shocks when they occur; overtime, it is expected to reduce the need for recourse to capital controls.
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Cover IMF Policy Discussion Papers
IMF Policy Discussion Papers
ISSN:
1564-5193
Publisher:
International Monetary Fund