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TWN Global Economy Series no. 17

The Management of Capital Flows and Financial Vulnerability in Asia

By YILMAZ AKYÜZ

Publisher: TWN (ISBN: 978-983-2729-80-8)

Year: 2009   No. of pages: 40

ABOUT THE BOOK

After the severe financial crisis of 1997, capital flows to emerging markets in Asia recovered strongly in the early years of this decade, propelled by conditions of ample global liquidity. This paper examines how these economies have responded to the capital surge and whether they have become more susceptible to financial shocks as a result.

Asian capital account regimes, it is shown, are generally more open today than they were in 1997. Countries in the region have not tightened restrictions on capital inflows but chose instead to deal with the influx of funds by accumulating vast stocks of foreign exchange reserves and relaxing resident outflows. While this approach has enabled them to avoid unsustainable currency appreciations and external deficits, it has not prevented rapid credit expansion, build-up of asset and investment bubbles, and currency and maturity mismatches in private sector balance sheets which now leave them highly vulnerable to shocks and contagion from the current global financial turmoil triggered by the subprime crisis.

ABOUT THE AUTHOR

YILMAZ AKYÜZ is a former Director of the Division on Globalization and Development Strategies at the United Nations Conference on Trade and Development (UNCTAD) in Geneva.

Contents

1          INTRODUCTION       

2          RECENT CAPITAL FLOWS TO ASIAN EMERGING MARKETS           

3          CREDIT, ASSET AND INVESTMENT BUBBLES

4          CURRENT ACCOUNT BALANCES, EXCHANGE RATES AND RESERVES      

5          CAPITAL ACCOUNT MEASURES

6          VULNERABILITY TO SHOCKS AND CONTAGION FROM THE GLOBAL

            FINANCIAL CRISIS

REFERENCES          

PRICE

US$8.00 for First World countries

US$6.00 for Third World countries

RM8.00 for Malaysia

Prices are inclusive of postage costs by airmail.

How to Order the Book

Visit our TWN Online Bookshop or contact Third World Network at 131 Jalan Macalister, 10400 Penang, Malaysia.

Tel: 604-2266159

Fax: 604-2264505

Email for further information.


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