Capital Mobility, Exchange Rates and Economic Crises

"This book argues that recent official proposals for reforming the 'international financial architecture' are also unlikely to reduce the frequency of currency and financial crises to an acceptable level. The author proposes an alternative plan to achieve greater financial stability: banks should have to double the currently accepted percentage of capital to risk-weighted assets from 8 to 16 per cent and the risk-weights for loans to emerging markets should also be raised sustainability; the financial sectors in emerging markets should be fully opened to foreign competition; bankruptcy procedures in emerging markets should be greatly strengthened; and central banks should adopt flexible exchange rates, backed by credible targets for inflation or monetary growth. If flexible exchange rates are not adopted, central banks should at least avoid the widespread practice of trying to sterilise the monetary effects of capital flows." "The author argues that the implementation of this plan will be a far more effective way of enhancing financial stability than controlling international capital flows, or trying to force private lenders to make new loans to countries that suffer crises."--Jacket.

Year

2003

Language

English

Publisher

Edward Elgar Pub

Editions

3

Pages

240

ISBN

9781843764731

Data source: Wikidata