Capital account liberalisation brings direct and indirect benefits to recipient economies. But large capital inflows or reversals lead to volatile exchange rate movements, asset price fluctuations and larger risk exposures. These complicate the conduct of monetary policy and could harm financial stability. As more economies become more integrated with global financial markets, appropriate policy design and frameworks are needed in sequencing capital account liberalisation and managing volatile capital flows. This course provides practical knowledge in understanding the benefits and risk exposures using the inter-relationships between external accounts data, including Balance of Payments Statistics, International Investment Position, International Banking Statistics and other indicators. In addition, topical discussions include the institutional framework on dealing with capital flows, sequencing capital account liberalisation and managing foreign reserves.
By the end of the course, participants will be able to (1) understand the importance of Balance of Payments Statistics, International Investment Position, and International Banking Statistics in assessing risks inherent in cross-border transactions and investments; (2) recognise inter-relationships and interpret various external accounts data; (3) identify causes and effects of volatile capital flows; (4) understand and assess institutional views on capital flows management tools, including capital controls; and (5) appreciate topical issues related to reserve accumulation, and sequencing of capital account liberalisation.
Middle-level officers/technical staff of central banks with at least two years of experience in external sector analysis, and monetary and financial policy analysis. A strong background on international macroeconomics is an advantage. Knowledge of various external accounts data sets is also an advantage.
• Costs and benefits of capital account liberalisation
• Sequencing of capital account liberalisation
• Balance of Payments statistics and capital flows
• International Investment Position and external adjustments
• International Banking Statistics and cross-border banking
• Episodes of large and volatile capital flows
• Capital flows management and use of capital controls
• Differentiating capital flows management and macroprudential measures
• Foreign official reserve accumulation and management