Cross-border Capital Flows since the Global Financial Crisis

Global gross capital flows remain well below their peak before the global financial crisis, which was reached after a period of unusual expansion. Much of the decline can be attributed to a reduced flow of lending by banks – particularly to, from and within the euro area – as banks have unwound many of the cross-border positions they built up before the crisis. Capital inflows to some economies, however, are now larger than they were before the crisis. The international regulatory response to the crisis aims to address some of the risks associated with increased capital flows, while maintaining the benefits of an integrated financial system.