The Liberalization and Management of Capital Flows - An Institutional View

Policy Papers ◽  
2012 ◽  
Vol 2012 (23) ◽  
Author(s):  
Keyword(s):  
Capital Flows ◽  
Monetary System ◽  
Balanced Approach ◽  
Analytical Work ◽  
Potential Benefits ◽  
Global Monetary System ◽  
Institutional View

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.

Capital Flows - Review of Experience with the Institutional View

Policy Papers ◽  
2016 ◽  
Vol 2016 (36) ◽  
Author(s):  
Keyword(s):  
Capital Flows ◽  
International Monetary System ◽  
Monetary System ◽  
Institutional View

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.

Concluding Thoughts

2018 ◽  
Author(s):  
Atish R. Ghosh ◽  
Jonathan D. Ostry ◽  
Mahvash S. Qureshi
Keyword(s):  
Emerging Markets ◽  
International Monetary System ◽  
Policy Makers ◽  
Monetary System ◽  
Trade Offs ◽  
Liquidity Insurance ◽  
Benefit Cost ◽  
Global Monetary System ◽  
Opening Up

This concluding chapter argues that the policy makers' vade mecum laid out in the previous chapter raises broader issues for the global monetary system. Notwithstanding the fact that some of the emerging markets may have liberalized their capital accounts prematurely, it questions whether emerging markets have further to gain from opening up, or indeed whether they would not be better off retaining restrictions on at least the riskiest forms of foreign liabilities and transactions. This is particularly pertinent since most of these countries do not enjoy the liquidity insurance provided by swap facilities let alone the reserve currency status. They are forced to self-insure through reserve accumulation, which is costly both to the country and to the international monetary system. Alternative forms of insurance could arguably yield favorable benefit–cost trade-offs, particularly if they result in a safer mix of flows that makes economies less prone to risks from changes in global push factors.

Guidance Note for the Liberalization and Management of Capital Flows

Policy Papers ◽  
2013 ◽  
Vol 2013 (34) ◽  
Author(s):  
Keyword(s):  
Capital Flows ◽  
Technical Assistance ◽  
International Agreements ◽  
Policy Advice ◽  
Research Staff ◽  
Guidance Note ◽  
Consistent Basis ◽  
Operational Guidance ◽  
Institutional View ◽  
Over Time

This note provides operational guidance to staff for how to use the Fund’s institutional view on the liberalization and management of capital flows. The institutional view is a consistent basis for providing policy advice on capital flows and policies related to them and assessments when required for surveillance. In the absence of an institutional view, country teams risk providing inconsistent advice to countries in similar circumstances (IEO, 2005). The view does not have mandatory implications for Fund-supported programs or technical assistance. It does not alter members’ rights and obligations under the Fund’s Articles of Agreement or under any other international agreements. The institutional view and guidance will evolve over time to reflect new experience, emerging views of authorities and staff, and research. Staff teams are encouraged to reflect useful lessons from authorities’ experiences with capital flow liberalization and management in Fund reports so that these experiences can continue to influence the Fund’s approach to these issues.

scholarly journals Toward an Integrated Policy Framework

Policy Papers ◽  
2020 ◽  
Vol 20 (46) ◽  
Author(s):  
Keyword(s):  
Capital Flows ◽  
Structural Characteristics ◽  
Optimal Path ◽  
Careful Consideration ◽  
Policy Framework ◽  
Fiscal Policies ◽  
Inappropriate Use ◽  
Integrated Policy ◽  
External Stabilization ◽  
Institutional View

Policymakers often face difficult tradeoffs in pursuing domestic and external stabilization objectives. The paper reflects staff’s work to advance the understanding of the policy options and tradeoffs available to policymakers in a systematic and analytical way. The paper recognizes that the optimal path of the IPF tools depends on structural characteristics and fiscal policies. The operational implications of IPF findings require careful consideration. Developing safeguards to minimize the risk of inappropriate use of IPF policies will be essential. Staff remains guided by the Fund’s Institutional View (IV) on the Liberalization and Management of Capital Flows.

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