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A Modernized Approach to Managing the Risks in Cross-Border Capital Movements

Author

Listed:
  • Ms. Inci Ötker
  • Mr. R. B. Johnston

Abstract

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.

Suggested Citation

  • Ms. Inci Ötker & Mr. R. B. Johnston, 1999. "A Modernized Approach to Managing the Risks in Cross-Border Capital Movements," IMF Policy Discussion Papers 1999/006, International Monetary Fund.
    • Handle: RePEc:imf:imfpdp:1999/006
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    Citations

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    Cited by:

    1. Ceyla Pazarbasioglu & Miss Gudrun Johnsen & Mr. Paul Louis Ceriel Hilbers & Ms. Inci Ötker, 2005. "Assessing and Managing Rapid Credit Growth and the Role of Supervisory and Prudential Policies," IMF Working Papers 2005/151, International Monetary Fund.
    2. Masahiro Kawai & Mario B. Lamberte (ed.), 2010. "Managing Capital Flows," Books, Edward Elgar Publishing, number 13713.
    3. Malgorzata Sulimierska, 2008. "The Theoretical Link Between Capital Account Liberalization and Currency Crisis Episodes," International Trade and Finance Association Conference Papers 1111, International Trade and Finance Association.
    4. Tri Thanh Vo & Chi Quang Pham, 2010. "Managing Capital Flows: The Case of Viet Nam," Chapters, in: Masahiro Kawai & Mario B. Lamberte (ed.), Managing Capital Flows, chapter 16, Edward Elgar Publishing.
    5. Malgorzata Sulimierska, 2008. "Capital Account Liberalization and Currency Crisis - The Case of Central Eastern European Countries," International Trade and Finance Association Conference Papers 1140, International Trade and Finance Association.
    6. Clara Garcia, 2004. "Capital Inflows, Policy Responses, and Their Ill Consequences: Thailand, Malaysia, and Indonesia in the Decade Before the Crises," Working Papers wp81, Political Economy Research Institute, University of Massachusetts at Amherst.

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