The Prudential Use of Capital Controls and Foreign Currency Reserves

2021 ◽  
Author(s):  
Javier Bianchi ◽  
Guido Lorenzoni
Keyword(s):  
Foreign Currency ◽  
Capital Controls

scholarly journals Deregulierung, Globalisierung und Deflation

2004 ◽  
Vol 34 (134) ◽  
pp. 15-40
Author(s):  
Hansjörg Herr
Keyword(s):  
World Economy ◽  
Foreign Currency ◽  
Capital Controls ◽  
Nominal Exchange Rate ◽  
Nominal Wage ◽  
Bretton Woods ◽  
Monetary System ◽  
Current Account Imbalances ◽  
Currency Competition ◽  
Economic Regime

Over the last decades, the economic regime changed substantially. The world economy developed from a hegemonic monetary system to a multi-currency system with intensive currency competition. With the breakdown of the Bretton-Woods System the nominal exchange-rate anchor collapsed, capital controls were reduced substantially, dollarisation increased, current account imbalances and debt in foreign currency exploded. Last but not least, labour markets were deregulated and the nominal wage anchor for the price level weakened. All these factors will lead to an increased danger of a deflationary world economy in the future.

scholarly journals Dampening Global Financial Shocks

2020 ◽  
Vol 20 (106) ◽  
Author(s):  
Katharina Bergant ◽  
Francesco Grigoli ◽  
Niels-Jakob Hansen ◽  
Damiano Sandri
Keyword(s):  
Monetary Policy ◽  
Emerging Markets ◽  
Foreign Currency ◽  
Capital Controls ◽  
Gdp Growth ◽  
Bank Capital ◽  
Financial Shocks ◽  
Macroprudential Regulation ◽  
Currency Mismatches ◽  
The Impact

We show that macroprudential regulation can considerably dampen the impact of global financial shocks on emerging markets. More specifically, a tighter level of regulation reduces the sensitivity of GDP growth to VIX movements and capital flow shocks. A broad set of macroprudential tools contribute to this result, including measures targeting bank capital and liquidity, foreign currency mismatches, and risky forms of credit. We also find that tighter macroprudential regulation allows monetary policy to respond more countercyclically to global financial shocks. This could be an important channel through which macroprudential regulation enhances macroeconomic stability. These findings on the benefits of macroprudential regulation are particularly notable since we do not find evidence that stricter capital controls provide similar gains.

Nigerian central bank faces short-term debt hazards

2019 ◽  
Keyword(s):  
Exchange Rate ◽  
Central Bank ◽  
Interest Rates ◽  
Foreign Currency ◽  
Capital Controls ◽  
Financial Inclusion ◽  
Medium Term ◽  
Short Term ◽  
Content Type ◽  
Double Digit

Significance Emefiele has vowed that the CBN will significantly increase financial inclusion, recapitalise banks and help the economy achieve double-digit growth over his second term. However, the significant amount of CBN bills in circulation, a key but costly component of the Bank’s recent exchange rate strategy, poses serious medium-term risks. Impacts The CBN's continued focus on exchange rate stability leaves limited space for reducing interest rates over the short term. Effective foreign currency yields of over 10% are appealing for portfolio investors, but a sudden naira slide would prompt major losses. Significant divestment by foreign portfolio investors may make the CBN resort to temporary capital controls to limit damage to the naira.

Effectiveness of Policy Instruments

2018 ◽  
Author(s):  
Atish R. Ghosh ◽  
Jonathan D. Ostry ◽  
Mahvash S. Qureshi
Keyword(s):  
Foreign Exchange ◽  
Foreign Currency ◽  
Balance Sheet ◽  
Policy Instruments ◽  
Capital Controls ◽  
Credit Growth ◽  
Macroprudential Policies ◽  
Macroeconomic Imbalances ◽  
Domestic Credit ◽  
Sterilized Intervention

This chapter assesses evidence on the effectiveness of various policy tools—foreign exchange (FX) intervention, nondiscriminatory macroprudential policies, capital controls, and currency-based prudential measures. When it comes to macroeconomic imbalances, sterilized FX intervention can be used to mitigate currency-appreciation pressures, and both sterilized intervention and macroprudential measures to curb domestic credit growth. As regards financial fragilities, capital controls can be used to tilt the composition of external liabilities away from riskier flows and restrict excessive foreign borrowing by the financial sector. Conversely, to limit foreign currency-denominated lending in the economy, currency-based macroprudential measures are strongly effective, with capital controls on inflows a possible alternative. The chapter's findings also show a significant association between the economy's resilience during crises and residency-based capital controls or currency-based prudential measures that help prevent the buildup of balance-sheet vulnerabilities.

The Importance of Capital Controls in Vietnam

2013 ◽  
Vol 215 ◽  
pp. 32-46
Author(s):  
TAM BANG VU ◽  
ERIC IKSOON IM
Keyword(s):  
Capital Controls

The limit of the contemporary financial system in Russia

2020 ◽  
Vol 16 (7) ◽  
pp. 1223-1245
Author(s):  
V.V. Smirnov
Keyword(s):  
Cluster Analysis ◽  
Foreign Currency ◽  
Financial System ◽  
Descriptive Statistics ◽  
High Tech ◽  
Monetary Aggregate ◽  
Internal System ◽  
Monetary Relations ◽  
And Cluster Analysis ◽  
Structural Preservation

Subject. The article focuses on the modern financial system of Russia. Objectives. I determine the limit of the contemporary financial system in Russia. Methods. The study is based on methods of descriptive statistics, statistical and cluster analysis. Results. The article shows the possibility of determining the scope of the contemporary financial system in Russia by establishing monetary relations as the order of the internal system and concerted operation of subsystems, preserving the structure of the financial system, maintaining the operational regime, implementing the program and achieving the goal. I found that the Russian financial system correlated with the Angolan one, and the real scope of the contemporary financial system in Russia. Conclusions and Relevance. As an attempt to effectively establish monetary relations and manage them, the limit of the contemporary financial system is related to the possibility of using Monetary Aggregate M0 to maintain the balance of the Central Bank of Russia. To overcome the scope of Russia’s financial system, the economy should have changed its specialization, refocusing it on high-tech export and increasing the foreign currency reserves. This can be done if amendments to Russia’s Constitution are adopted. The findings expand the scope of knowledge and create new competence in the establishment of monetary relations, order of the internal system and concerted interaction of subsystems, structural preservation of the financial system and maintenance of its operational regime.

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