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

Inci Ötker-Robe () and R. Johnston

No 1999/006, IMF Policy Discussion Papers from International Monetary Fund

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.

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 (search for similar items in EconPapers)
Pages: 24
Date: 1999-07-01
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=3188 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfpdp:1999/006

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Policy Discussion Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().