Download or read book The Fund s Role Regarding Cross Border Capital Flows written by International Monetary Fund. Strategy, Policy, & Review Department and published by International Monetary Fund. This book was released on 2010-11-15 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: Global capital flows have multiplied many times over in recent years, mainly between advanced economies but increasingly also to emerging markets, reflecting the general reduction in regulatory and informational barriers. Thus, with international asset positions now dwarfing output, global portfolio allocations and reallocations have profound effects on the world economy, as demonstrated by recent boombust episodes of both global reach (e.g., the transmission of the 2001 IT shock and the 2008 mortgage market shock from the United States) and regional significance (in Asia, Latin America, and Central and Eastern Europe). Such cycles and reversals in cross-border capital flows should not be surprising, given that these flows - more so than domestic ones - imply crossing informational barriers, currency and macroeconomic risks, and regulatory regimes.

Download or read book The Fund s Role Regarding Cross Border Capital Flows written by Internationaler Währungsfonds and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Global capital flows have multiplied many times over in recent years, mainly between advanced economies but increasingly also to emerging markets, reflecting the general reduction in regulatory and informational barriers. Thus, with international asset positions now dwarfing output, global portfolio allocations and reallocations have profound effects on the world economy, as demonstrated by recent boombust episodes of both global reach (e.g., the transmission of the 2001 IT shock and the 2008 mortgage market shock from the United States) and regional significance (in Asia, Latin America, and Central and Eastern Europe). Such cycles and reversals in cross-border capital flows should not be surprising, given that these flows - more so than domestic ones - imply crossing informational barriers, currency and macroeconomic risks, and regulatory regimes.

Download or read book The IMF and Regulation of Cross Border Capital Flows written by Adam Feibelman and published by . This book was released on 2015 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: This Article examines the International Monetary Fund's recent efforts to play an assertive regulatory role with regard to global capital flows. There is a growing consensus among scholars and policymakers that states must carefully manage capital flows and coordinate their policies for doing so, and that direct capital controls are a useful part of their policy toolkit in extreme circumstances. After many years of evolution in this direction, the Fund has become a leading proponent of this consensus, and it now views helping its members manage capital movements to be a prominent part of its post-crisis mandate. This effort has become a centerpiece of the Fund's bilateral and multilateral surveillance. The Fund has embraced this role against a backdrop of a web of uncoordinated international trade and investment agreements that commit states to liberalize their capital account policies. There is currently no other multilateral framework designed to systematically manage global capital flows. For the foreseeable future, the Fund is in a unique position to play a productive role in helping states craft consistent approaches to capital flows and in promoting international coordination of these policies. It faces significant challenges in the effort, however, including its members' potentially conflicting obligations under trade and investment treaties, uncertainty about the scope of its jurisdiction over capital flows, and pervasive limitations of the consultative mode of its surveillance. Thus, the Fund's ambition to help its members manage capital flows will be an important test of its post-crisis mandate to promote global stability.

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 The IMF s Jurisdiction Over the Capital Account Reviewing the Role of Surveillance in Managing Cross Border Capital Flows written by Menno Broos and published by . This book was released on 2018 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: In 1941, John Maynard Keynes noted that “[n]othing is more certain than that the movement of capital funds must be regulated; which in itself will involve far-reaching departures from laissez-faire arrangements”. 77 years later, the international regulation of capital movements appears everything but certain. The purpose of this paper is to review the IMF's jurisdiction over the capital account. While the IMF has become the most important international financial institution (IFIs) to oversee international flows of capital, it has surprisingly little formal power to influence its members' capital flow measures (CFMs). This paper revisits the case for as well as against strengthening the IMF's (formal) jurisdiction over countries' capital account. We also link this debate to the ongoing discussion in policy-making circles. Moving forward, the IMF could play more central and powerful a role in determining what capital account policies support or undermine the stability of its members and the system as a whole. As we show in this paper, while reluctant to legally empower the Fund, states have endorsed a gradual expansion of its bilateral and multilateral surveillance mandate, thereby implicitly favouring “soft” law over “hard” law solutions. An important question is thus whether the Fund's surveillance functions and the mechanisms of peer pressure and moral suasion that its efficacy relies upon, are adequate means for the IMF to fulfil its mandate? Without providing an exhaustive answer, the paper provides an overview of the debate and makes some suggestions on the way forward.

Download or read book Economics of Sovereign Wealth Funds written by Mr.Udaibir S. Das and published by International Monetary Fund. This book was released on 2010-12-09 with total page 330 pages. Available in PDF, EPUB and Kindle. Book excerpt: The book covers a wide range of topics of relevance to policymakers in countries that have sovereign wealth funds (SWFs) and those that receive SWF investments. Renowned experts in the field have contributed chapters. The book is organized around four themes: (1) the role and macrofinancial linkages of SWFs, (2) institutional factors, (3) investment approaches and financial markets, and (4) the postcrisis outlook. The book also discusses the challenges facing sovereign wealth funds in the coming years, from an inside perspective on countries, including Canada, Chile, China, Norway, Russia, and New Zealand. Economics of Sovereign Wealth Funds will contribute to a further understanding of the nature, strategies and behavior of SWFs and the environment in which they operate, as their importance is likely to grow in the coming years.

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 International Mutual Funds Capital Flow Volatility and Contagion A Survey written by Mr.R. Gelos and published by International Monetary Fund. This book was released on 2011-04-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Gaining a better understanding of the behavior of international investors is key for informing the debate about the optimal response to capital flows and about reforms to the international financial architecture. In this context, recent research on the behavior of international mutual funds at the micro level has expanded our knowledge about the drivers of portfolio flows and the mechanisms behind the transmission of financial shocks across countries. This paper provides a brief survey of this literature, with a focus on the empirical evidence for emerging markets. Overall, the behavior of international mutual funds is complex and overly simplistic characterizations are misleading. However, there is broad-based evidence for momentum trading among funds. Moreover, funds tend to avoid opaque markets and assets, and this behavior becomes more pronounced during volatile times. Portfolio rebalancing mechanisms are clearly important in explaining contagion patterns, even in the absence of common macroeconomic fundamentals. From a surveillance point of view, this implies that monitoring the exposures of large investors at a micro level is crucial to assess vulnerabilities.

Download or read book A Modernized Approach to Managing the Risks in Cross Border Capital Movements written by Ms.Inci Ötker and published by International Monetary Fund. This book was released on 1999-07-01 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.

Download or read book Taming Capital Flows written by J. Stiglitz and published by Springer. This book was released on 2015-05-05 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: This volume contains country experiences explained by policy makers and studies by leading experts on causes and consequences of capital flows as well as policies to control these flows. It addresses portfolio flow issues central to open economies, especially emerging markets.

Download or read book Push Factors and Capital Flows to Emerging Markets written by Mr.Eugenio Cerutti and published by International Monetary Fund. This book was released on 2015-06-22 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the behavior of gross capital inflows across 34 emerging markets (EMs). We first confirm that aggregate inflows to EMs co-move considerably. We then report three findings: (i) the aggregate co-movement conceals significant heterogeneity across asset types as only bank-related and portfolio bond and equity inflows do co-move; (ii) while global push factors in advanced economies mostly explain the common dynamics, their relative importance varies by type of flow; and (iii) the sensitivity to common dynamics varies significantly across borrower countries, with market structure characteristics (especially the composition of the foreign investor base and the level of liquidity) rather than borrower country’s institutional fundamentals strongly affecting sensitivities. Countries relying more on international funds and global banks are found to be more sensitive to push factors. Our findings suggest that EMs need to closely monitor their lenders and investors to assess their inflow exposures to global push factors.

Download or read book Regulating Capital Flows at Both Ends written by Mr.Atish R. Ghosh and published by International Monetary Fund. This book was released on 2014-10-17 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines whether cross-border capital flows can be regulated by imposing capital account restrictions (CARs) in both source and recipient countries, as was originally advocated by John Maynard Keynes and Harry Dexter White. To this end, we use data on bilateral cross-border bank flows from 31 source to 76 recipient (advanced and emerging market) countries over 1995–2012, and combine this information with a new and comprehensive dataset on various outflow and inflow related capital controls and prudential measures in these countries. Our findings suggest that CARs at either end can significantly influence the volume of cross-border bank flows, with restrictions at both ends associated with a larger reduction in flows. We also find evidence of cross-border spillovers whereby inflow restrictions imposed by countries are associated with larger flows to other countries. These findings suggest a useful scope for policy coordination between source and recipient countries, as well as among recipient countries, to better manage potentially disruptive flows.

Download or read book Staff Guidance Note on Macroprudential Policy written by International Monetary Fund and published by International Monetary Fund. This book was released on 2014-06-11 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: This note provides guidance to facilitate the staff’s advice on macroprudential policy in Fund surveillance. It elaborates on the principles set out in the “Key Aspects of Macroprudential Policy,” taking into account the work of international standard setters as well as the evolving country experience with macroprudential policy. The main note is accompanied by supplements offering Detailed Guidance on Instruments and Considerations for Low Income Countries

Download or read book Capital Flows at Risk Taming the Ebbs and Flows written by Mr.R. G Gelos and published by International Monetary Fund. This book was released on 2019-12-20 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: The volatility of capital flows to emerging markets continues to pose challenges to policymakers. In this paper, we propose a new framework to answer critical policy questions: What policies and policy frameworks are most effective in dampening sharp capital flow movements in response to global shocks? What are the near- versus medium-term trade-offs of different policies? We tackle these questions using a quantile regression framework to predict the entire future probability distribution of capital flows to emerging markets, based on current domestic structural characteristics, policies, and global financial conditions. This new approach allows policymakers to quantify capital flows risks and evaluate policy tools to mitigate them, thus building the foundation of a risk management framework for capital flows.

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 International Capital Flows written by Martin Feldstein and published by University of Chicago Press. This book was released on 2007-12-01 with total page 500 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent changes in technology, along with the opening up of many regions previously closed to investment, have led to explosive growth in the international movement of capital. Flows from foreign direct investment and debt and equity financing can bring countries substantial gains by augmenting local savings and by improving technology and incentives. Investing companies acquire market access, lower cost inputs, and opportunities for profitable introductions of production methods in the countries where they invest. But, as was underscored recently by the economic and financial crises in several Asian countries, capital flows can also bring risks. Although there is no simple explanation of the currency crisis in Asia, it is clear that fixed exchange rates and chronic deficits increased the likelihood of a breakdown. Similarly, during the 1970s, the United States and other industrial countries loaned OPEC surpluses to borrowers in Latin America. But when the U.S. Federal Reserve raised interest rates to control soaring inflation, the result was a widespread debt moratorium in Latin America as many countries throughout the region struggled to pay the high interest on their foreign loans. International Capital Flows contains recent work by eminent scholars and practitioners on the experience of capital flows to Latin America, Asia, and eastern Europe. These papers discuss the role of banks, equity markets, and foreign direct investment in international capital flows, and the risks that investors and others face with these transactions. By focusing on capital flows' productivity and determinants, and the policy issues they raise, this collection is a valuable resource for economists, policymakers, and financial market participants.

Download or read book Gross Private Capital Flows to Emerging Markets written by Erlend Nier and published by International Monetary Fund. This book was released on 2014-10-27 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper assesses empirically the key drivers of private capital flows to a large sample of emerging market economies in the last decade. It analyzes the effect of the global financial cycle, measured by the VIX, on capital flows and investigates the role of fundamentals and country characteristics in mitigating or amplifying its effect. Using interaction models, we find the effect of the VIX to be non-linear. For low levels of the VIX, capital flows are driven by fundamental factors. During periods of stress, the VIX becomes the dominant driver of capital flows while other determinants, with the exception of interest rate differentials, lose statistical significance. Our results also suggest that the effect of global financial conditions on gross private capital flows increases with the host country’s level of financial sector development. Finally, our results imply that countries cannot fully insulate themselves from global financial shocks, unless creating a fragmented global financial system.