Debt burdens endanger world financial stability, IMF warns (3)

08:44, April 21, 2010      

Email | Print | Subscribe | Comments | Forum 

Capital control

Emerging markets, which have outpaced advanced economies in recovery, face stability challenges from this multi-speed global recovery, IMF warned.

Prospects for strong growth, appreciating currencies, and rising asset prices are pulling portfolio capital flows into Asia Pacific (excluding Japan) and Latin American countries, the report showed.

"Although the benefits of capital inflows are manifold, sudden inflow surges may lead to inflation and asset price bubbles," it said.

To tackle the problems, a pragmatic approach using a combination of macroeconomic and prudential financial policies is advisable for emerging countries, IMF said.

The report said that global liquidity pushes up local equity prices and lowers real interest rates in receiving countries, typically by more than domestic liquidity, and that more flexible exchange rates can dampen such effects.

In addition to a mix of macroeconomic policies, including a more flexible exchange rate when conditions permit, capital controls can lengthen the maturity of some types of inflows, and may also be adopted by receiving economies to respond to capital inflow, IMF said.

Source:Xinhua
【1】 【2】 【3】

(Editor:intern1)

  • Do you have anything to say?

双语词典
dictionary

  
Special Coverage
  • Premier Wen Jiabao visits Hungary, Britain, Germany
  • From drought to floods
Major headlines
Editor's Pick
  • On Sept. 26, a resident passes by a flower terrace decorated for the coming National Day. (Xinhua/Hang Xingwei)
  • The photo, taken on Sept. 26, shows the SWAT team ready for the joint exercise. (Xinhua/Wangkai)
  • Two metro trains in Shanghai collided Tuesday afternoon, and an identified number of passengers were injured in the accident, the Shanghai-based eastday.com reported. Equipment failures were believed to have caused the crash on the Line 10 subway, Xinhua quoted local subway operator as saying.
  • An employee at a gold store in Yiwu, located in east China's Zhejiang province, shows gold jewelry on Monday.(Xinhua/Zhang Jiancheng)
  • Tourists ride camels near China's largest desert lake Hongjiannao in Yulin, north China's Shaanx Province, Sept. 24, 2011. Hongjiannao is shrinking as a result of climate change and human activities, and may vanish in a few decades. Its lake area, which measured more than 6,700 hectares in 1996, has shrunk to 4,180 hectares. Its water level is declining by 20-30 centimeters annually and its water PH value has risen to 9.0-9.42 from 7.4-7.8. (Xinhua/Liu Yu)
  • Actors perform royal dance at the Gyeongbok Palace in Seoul, Sept. 27, 2011. A ceremony commemorating the 38th South Korea Sightseeing Day was held in Gyeongbok Palace on Tuesday. (Xinhua/He Lulu)
Hot Forum Discussion