Capital Account Convertibility and Risk Management in India

Amadou Sy

No 2007/251, IMF Working Papers from International Monetary Fund

Abstract: This paper takes a closer look at the prudential and regulatory measures needed to prepare India's financial system to manage the risks arising from fuller capital account convertibility (FCAC). The paper contributes to the debate on FCAC in two ways. First, it reviews the potential and existing financial stability challenges to FCAC in India. Second it studies how prudential regulation and supervision is addressing these challenges. The main conclusion is that regulatory and supervisory measures alone are not enough and will need to be complemented by improvements in Indian banks' risk management and further development of the domestic capital markets.

Keywords: WP; derivative instrument; market; risk; bank; interest rate (search for similar items in EconPapers)
Pages: 12
Date: 2007-10-01
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Citations: View citations in EconPapers (2)

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