Challenges and Options in Managing Capital Flows for Small, Open, and Financially Integrated Economies
This study assesses the evolving trends and impacts of capital flows, especially portfolio flows, to SEACEN member economies. More importantly, it offers policy insights on managing volatile capital flows in the broader context of monetary policy objectives and other considerations of small, open, and financially integrated economies. The discussions and empirical findings of this study provide deeper insights on the evolving complexities of international financial systems and structures, vulnerabilities and risks that arise from volatile financial flows, as well as the rationale for a more robust policy framework.
On policy insights, this study highlights that the fast-evolving landscape of capital flows calls for a more robust and innovative framework of integrated policy, whereby monetary policy should be combined with other policy measures, such as macroprudential measures, foreign exchange intervention and capital flow management measures. A way to operationalise this is by integrating capital flow risk management into the policy framework using a variation of the Taylor-type rule.
Complete Book [link]
Section 1: The Nature and Patterns of Capital Inflows in Emerging Economies [link]
Section 2: Macro-Financial Risks and Vulnerabilities Arising from Volatile Capital Flows [link]
Section 3: Policy Measures and Framework in Addressing Macro-Financial Implications of Volatile Capital Flows [link]
Section 4: The SEACEN Centre’s Perspective on a Policy Framework and Its Operationalisation [link]
Section 5: Evolving Monetary Policy Frameworks and Capital Flows: SEACEN Central Banks Leading the Way [link]
Section 6: Preserving Macroeconomic and Financial Stability in Small, Open and Financially Integrated Economies [link]
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