How to Manage Foreign Capital Inflows? A Brief Technical Note

Abstract

This note acknowledges the current policy concerns of emerging market economies (EMEs) relating to their foreign capital influxes. Although, capital mobility brings many benefits to a country's economy, it also creates instability and worsens crises. Managing this issue is not an easy task. Some measures should be put in place to curb the sudden capital influxes that are being experienced by some EMEs around the globe. This note suggests possible policy options for managing the capital inflows.

Keywords

• Capital inflows
• Asia
• EMEs
• Credit crunch