Download or read book Liberalizing Capital Flows and Managing Outflows Background Paper written by International Monetary Fund. Monetary and Capital Markets Department and published by International Monetary Fund. This book was released on 2012-03-14 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Liberalization of capital flows can benefit both source and recipient countries by improving resource allocation, reducing financing costs, increasing competition and accelerating the development of domestic financial systems. The empirical evidence, however, is mixed on the benefits, and it suggests that countries benefit most when they meet certain thresholds related to institutional and financial development. The principal cost of capital flow liberalization stems from the economic instability brought on by volatile capital flows. In extreme cases, sudden stops or reversals in capital inflows can trigger financial crises followed by prolonged periods of weak growth.
Download or read book Liberalizing Capital Flows and Managing Outflows written by Internationaler Währungsfonds and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Liberalization of capital flows can benefit both source and recipient countries by improving resource allocation, reducing financing costs, increasing competition and accelerating the development of domestic financial systems. The empirical evidence, however, is mixed on the benefits, and it suggests that countries benefit most when they meet certain thresholds related to institutional and financial development. The principal cost of capital flow liberalization stems from the economic instability brought on by volatile capital flows. In extreme cases, sudden stops or reversals in capital inflows can trigger financial crises followed by prolonged periods of weak growth.
Download or read book Liberalizing Capital Flows and Managing Outflows written by International Monetary Fund. Monetary and Capital Markets Department and published by INTERNATIONAL MONETARY FUND. This book was released on 2012-03-13 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is the fourth in a series of Board papers developing a comprehensive Fund view on capital flows and the policies that affect them. A first paper in December 2010 dealt with the Fund’s overall role in this area, both historically and prospectively. The second paper in March 2011 developed a framework for policy advice on managing capital inflows broadly endorsed by the Board, which constitutes a first round articulation of the Fund’s institutional views on managing capital inflows. The third paper in November 2011 examined the multilateral aspects of policies affecting capital flows, and focused mainly on source country policies. This paper covers liberalizing capital flows and the management of outflows.
Download or read book Review of The Institutional View on The Liberalization and Management of Capital Flows Background Note on Capital Flows and Capital Flow Management Measures Benefits and Costs written by Gurnain Kaur Pasricha and published by International Monetary Fund. This book was released on 2022-03-30 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Fund’s Institutional View (IV) recognizes the benefits of and risks associated with capital flows. Since the IV was adopted, a growing literature has provided additional insights into the benefits and risks from capital flows. This note summarizes the insights from the recent literature and the experiences of staff since the adoption of the IV that have informed this review.
Download or read book Do Inflows or Outflows Dominate Global Implications of Capital Account Liberalization in China written by Mr.Tamim Bayoumi and published by International Monetary Fund. This book was released on 2013-08-28 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses the implications of Chinese capital account liberalization for capital flows. Stylized facts from capital account liberalization in advanced and large emerging market economies illustrate that capital account liberalization has historically generated large gross capital in- and outflows, but the direction of net flows has depended on many factors. An econometric portfolio allocation model finds that capital controls significantly dampen cross-border portfolio asset holdings. The model also suggests that capital account liberalization in China may trigger net portfolio outflows as large domestic savings seek to diversify abroad.
Download or read book The Liberalization and Management of Capital Flows An Institutional View written by International Monetary Fund. Strategy, Policy, & Review Department and published by International Monetary Fund. This book was released on 2012-04-11 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: Capital flows have increased significantly in recent years and are a key aspect of the global monetary system. They offer potential benefits to countries, but their size and volatility can also pose policy challenges. The Fund needs to be in a position to provide clear and consistent advice with respect to capital flows and policies related to them. In 2011, the International Monetary and Financial Committee (IMFC) called for ?further work on a comprehensive, flexible, and balanced approach for the management of capital flows.? This paper proposes an institutional view to underpin this approach, drawing on earlier Fund policy papers, analytical work, and Board discussions on capital flows.
Download or read book Capital Controls written by Ms.Inci Ötker and published by International Monetary Fund. This book was released on 2000-05-17 with total page 135 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines country experiences with the use and liberalization of capital controls to develop a deeper understanding of the role of capital controls in coping with volatile capital flows, as well as the issues surrounding their liberalization. Detailed analyses of country cases aim to shed light on the motivations to limit capital flows; the role the controls may have played in coping with particular situations, including in financial crises and in limiting short-term inflows; the nature and design of the controls; and their effectivenes and potential costs. The paper also examines the link between prudential policies and capital controls and illstrates the ways in which better prudential practices and accelerated financial reforms could address the risks in cross-border capital transactions.
Download or read book Effects of Capital Flow Liberalization written by Tahsin Saadi Sedik and published by International Monetary Fund. This book was released on 2012-11-16 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the experiences of emerging market economies (EMEs) that have liberalized capital flows over the past 15 years with respect to macroeconomic performance and risks to financial stability. The results of the panel data regressions indicate that greater openness to capital flows is associated with higher growth, gross capital flows, and equity returns and with lower inflation and bank capital adequacy ratios. The effects vary depending on thresholds. As a potential application of these findings, the paper explores the possible effects of liberalization on China by applying the coefficients of explanatory variables to the corresponding variables of China in 2012–16.
Download or read book Controlled Capital Account Liberalization written by Raghuram Rajan and published by International Monetary Fund. This book was released on 2005-10-01 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we develop a proposal for a controlled approach to capital account liberalization for economies experiencing large capital inflows. The proposal essentially involves securitizing a portion of capital inflows through closed-end mutual funds that issue shares in domestic currency, use the proceeds to purchase foreign exchange from the central bank and then invest the proceeds abroad. This would eliminate the fiscal costs of sterilizing those inflows, give domestic investors opportunities for international portfolio diversification and stimulate the development of domestic financial markets. More importantly, it would allow central banks to control both the timing and quantity of capital outflows. This proposal could be part of a broader toolkit of measures to liberalize the capital account cautiously when external circumstances are favorable. It is not a substitute for other necessary policies such as strengthening of the domestic financial sector or, in some cases, greater exchange rate flexibility. But it could in fact help create a supportive environment for these essential reforms.
Download or read book Managing Capital Flows written by Masahiro Kawai and published by Edward Elgar Publishing. This book was released on 2010-01-01 with total page 465 pages. Available in PDF, EPUB and Kindle. Book excerpt: Managing Capital Flows provides analyses that can help policymakers develop a framework for managing capital flows that is consistent with prudent macroeconomic and financial sector stability. While capital inflows can provide emerging market economies with invaluable benefits in pursuing economic development and growth, they can also pose serious policy challenges for macroeconomic management and financial sector supervision. The expert contributors cover a wide range of issues related to managing capital flows and analyze the experience of emerging Asian economies in dealing with surges in capital inflows. They also discuss possible policy measures to manage capital flows while remaining consistent with the goals of macroeconomic and financial sector stability. Building on this analysis, the book presents options for workable national policies and regional policy cooperation, particularly in exchange rate management. Containing chapters that bring in international experiences relevant to Asia and other emerging market economies, this insightful book will appeal to policymakers in governments and financial institutions, as well as public and private finance experts. It will also be of great interest to advanced students and academic researchers in finance.
Download or read book Capital Flows Review of Experience with the Institutional View written by International Monetary Fund. Legal Dept. and published by International Monetary Fund. This book was released on 2016-07-11 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: Capital flows are an important aspect of the international monetary system. They provide significant benefits, both direct and indirect. At the same time, they also carry risks, and a key challenge for countries is how to harness the benefits while managing the risks. The institutional view on the liberalization and management of capital flows provides the Fund with a basis for consistent advice on policies related to capital flows. This paper reviews countries’ experiences with handling capital flows in the period since the adoption of the IMF’s institutional view in 2012. Based on the experience, it identifies a few areas in which the view would benefit from further clarification or elaboration.
Download or read book Can a Liberalization of Capital Outflows Increase Net Capital Inflows written by Raúl Labán and published by . This book was released on 1997 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Review of The Institutional View on The Liberalization and Management of Capital Flows written by International Monetary Fund and published by International Monetary Fund. This book was released on 2022-03-30 with total page 98 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Institutional View (IV) on the Liberalization and Management of Capital Flows, adopted in 2012, provides the basis for consistent advice, and where relevant, assessments on policies related to capital flows. This paper reviews the IV, informed by advances in research, notably the work on an Integrated Policy Framework (IPF), the findings of the 2020 evaluation by the Independent Evaluation Office (IEO) on IMF Advice on Capital Flows, and staff’s experience with the implementation of the IV. The core premises and objectives of the IV remain unchanged. The IV rests on the premises that capital flows are desirable as they can bring substantial benefits for countries, and that capital flow management measures (CFMs) can be useful in certain circumstances but should not substitute for warranted macroeconomic adjustment. With those premises in mind, the IV aims to help countries reap the benefits of capital flows, while managing the associated risks in a way that preserves macroeconomic and financial stability and does not generate significant negative outward spillovers.
Download or read book Capital Liberalization Capital Flows and Monetary Policy Responses on Exchange Market written by Jae-Ho Chung and published by . This book was released on 2001 with total page 146 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines some of the most vital aspects of Korea's experience with capital flows, such as the determinants of capital flows, the monetary policy on exchange market, and the relationships among capital liberalization, capital flows, domestic credit, and exchange market. I construct indexes of capital liberalization on controls of capital inflows and outflows based on documented policy changes made by the Koran government. I use EMP (Exchange Market Pressure) as well as nominal and real exchange rate as terms of exchange market. The main findings of this paper are as follows. (1) Interest rate differentials as a variable of portfolio theory do not explain capital flows in Korea. The interest rate differential terms are often of the wrong sign, so Korea's capital flows are not explained by the portfolio theory. On the other hand, the changes of domestic credit are generally significant in capital flow. This result suggests that the monetary approach may be good in explaining capital flows. (2) Using VAR framework, I find that the change of domestic credit is a good stance of the monetary policy, and the negative shock to the change of domestic credit affect the appreciation of nominal and real exchange rate. A contractionary monetary policy leads to continuous appreciation and leads to reduce exchange market pressure. (3) I cannot reject the null hypothesis that CLI is not Granger-caused by any variables. The capital liberalizations in Korea are exogeneous. (4) I find that capital inflows increase persistently after shocks to liberalization policy while capital outflows increase temporally. I also find that shocks to liberalization of capital outflows attract capital inflows. (5) Domestic credit responds negatively on capital inflows and positively on capital outflows. The sterilization was effective for one month after capital inflows. (6) The responses of nominal and real exchange rates to capital inflows are negative and exchange rates are appreciated as in theory and empirical tests.
Download or read book Capital Account Liberalization as a Signal written by Leonardo Bartolini and published by . This book was released on 1996 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We present a model in which a government's current capital controls policy signals future policies. Controls on capital outflows evolve in response to news on technology, conditional on government attitudes towards taxation of capital. When there is uncertainty over government types, a policy of liberal capital outflows sends a favorable signal that may trigger a capital inflow. This prediction is consistent with the experience of several countries that have liberalized their capital account.
Download or read book Why Do Emerging Markets Liberalize Capital Outflow Controls written by Joshua Aizenman and published by . This book was released on 2013 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: Most of the recent policy debate on the appropriateness of capital controls has focused on the use of capital inflow controls in the face of surges in net capital inflows. However, countries that have existing capital outflow controls have another potential tool to reduce net capital inflows (NKI) - the liberalization of outflows. It follows that the decision to liberalize outflow controls in response to surging inflows could potentially involve weighing the benefits of reducing NKI by facilitating greater outflows against the lost revenues from financial repression. In this paper, we weigh the evidence on the complex motivations for capital outflow controls policy by examining the various macroeconomic and fiscal factors at the time these controls were liberalized. Our results indicate that concerns related to net capital inflows took predominance over fiscal concerns in the decision to liberalize capital outflow controls in the 2000's. Emerging market economies (EMEs) facing sudden stops, high volatility in net capital inflows and higher balance sheet exposures liberalized less. Countries eased more in response to higher net capital inflows, and when these inflows translated into higher appreciation pressure in the exchange market, higher real exchange rate volatility, and greater accumulation of reserves. Unlike the 1980's, we find very limited importance of fiscal variables in explaining liberalization of capital outflow controls. This lack of association is consistent with the decline in repression revenues and growth accelerations for EMEs in the 2000's.
Download or read book Managing Volatile Capital Flows Experiences and Lessons for Sub Saharan African Frontier Markets written by Cheikh A. Gueye and published by International Monetary Fund. This book was released on 2014-03-26 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: During the past three years the frontier markets of sub-Saharan Africa have received growing amounts of portfolio capital flows, with heightened interest from foreign investors. Compared with foreign direct investment, portfolio capital flows tend to be more volatile, and thus pose challenges for sub-Saharan African frontier markets. This study examines the evolution of capital flows since 2010 and discusses the policies these countries have designed to reduce risks from the inherent volatility of these flows.
