Coping With Capital Inflows: Experiences of Selected European Countries

46 Pages Posted: 23 Aug 2007

See all articles by Inci Otker-Robe

Inci Otker-Robe

International Monetary Fund (IMF) - Monetary and Capital Markets Department; World Bank

Zbigniew Polanski

National Bank of Poland

Barry Topf

Bank of Israel

David Vávra

International Monetary Fund (IMF)

Date Written: July 2007

Abstract

This paper reviews the experiences of a number of European countries in coping with capital inflows. It describes the nature of the inflows, their implications for macroeconomic and financial stability, and the policy responses used to cope with them. The experiences suggest that as countries become more integrated with international financial markets, there is little room to regulate capital flows effectively. The most effective ways to deal with capital inflows would be to deepen the financial markets, strengthen financial system supervision and regulation, where needed, and improve the capacity to design and implement sound macroeconomic and financial sector policies. These actions will help increase the absorption capacity and resilience of the economies and financial systems to the risks associated with the inflows.

Keywords: Capital inflows, Capital markets, Inflation targeting, Working Paper

Suggested Citation

Ötker-Robe, İnci and Polanski, Zbigniew and Topf, Barry and Vávra, David, Coping With Capital Inflows: Experiences of Selected European Countries (July 2007). IMF Working Paper No. 07/190, Available at SSRN: https://ssrn.com/abstract=1007938

İnci Ötker-Robe (Contact Author)

International Monetary Fund (IMF) - Monetary and Capital Markets Department ( email )

United States
202 623-7000 (Phone)
202 623-4661 (Fax)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Zbigniew Polanski

National Bank of Poland ( email )

00-919 Warsaw
Poland

Barry Topf

Bank of Israel ( email )

P.O. Box 780
Jerusalem, 91907
Israel

David Vávra

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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