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Liberalization and regulation of international capital flows: where the opposites meet

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  • Nunnenkamp, Peter

Abstract

The paper discusses the pros and cons of capital account liberalization. Rather than contrasting liberalization and regulation of capital flows as irreconcilable antagonisms, we argue that capital account liberalization requires institutional and regulatory safeguards. Even though the effectiveness of specific capital controls cannot be taken for granted, we reject the view that financial globalization has deprived national policymakers of the means to protect their economies against crisis. In addition to national safeguards, we assess the chances for crisis prevention and resolution on the regional level and present options to overcome institutional deficits on the global level. We conclude that reforms of the international financial architecture can help prevent illiquidity and ensure a fair burden sharing in the case of insolvency, without aggravating moral hazard behavior of the parties involved.

Suggested Citation

  • Nunnenkamp, Peter, 2001. "Liberalization and regulation of international capital flows: where the opposites meet," Kiel Working Papers 1029, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1029
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    References listed on IDEAS

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    1. Nunnenkamp, Peter, 2001. "Too Much, Too Little, or Too Volatile? International Capital Flows to Developing Countries in the 1990s," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 5(1), pages 119-147, June.
    2. Nunnenkamp, Peter, 2001. "Umbaupläne und Reparaturarbeiten an der internationalen Finanzarchitektur: eine Zwischenbilanz aus deutscher Perspektive," Kiel Working Papers 1078, Kiel Institute for the World Economy (IfW Kiel).
    3. Nunnenkamp, Peter, 2003. "Systemic factors and economic development in Islamic countries," Open Access Publications from Kiel Institute for the World Economy 4319, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    Keywords

    financial crises; financial regulation; international financial architecture; capital account liberalization;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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