The process of globalization has integrated financial markets and cross-border capital flows. This has resulted in the hyper mobility of capital and increased the vulnerability of nations to speculative attacks on their currencies. Capital flows deliver benefits in a first-best world. However, in a second-best world capital controls can reduce the welfare losses due to information asymmetry and other distortions. The speed and sequencing of capital account liberalization are critical to minimize the exposure of an economy to currency crises. Various types of currency crises and resulting contagion and its regional nature have been reviewed. Crisis contagion poses a systemic threat to the stability of the global financial system. Therefore the reform of the international financial architecture in order to minimize the occurrence of crises and crises contagion is matter of utmost importance. The role of the key players in the arena of global capital flows and the proposals for redesigning the international financial architecture are critically reviewed.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by School of Economics, University of Queensland, Australia in its series Discussion Papers Series with number
300.
For technical questions regarding this item, or to correct its listing, contact: (Tobin Millen).
Related research
Keywords:
Other versions of this item:
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: