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Macroprudential Regulation of International Finance

Managing Capital Flows and Exchange Rates Edited by Dongsoo Kang, Senior Fellow, Department of Financial Policy, Korea Development Institute, South Korea and Andrew Mason, Professor of Economics, University of Hawaii at Manoa and Senior Fellow, Population and Health Studies, East-West Center, Hawaii, US
Recent events, such as capital flow reversals and banking sector crises, have shaken faith in the widely held belief in the benefits of greater financial integration and financial deepening, which are typical in advanced economies. This book shows that emerging economies have often weathered the storm best despite the supposed burden of ‘weak institutions’. It demonstrates that a better policy framework requires reliable indicators of vulnerability to financial instability, as well as improved policy tools and automatic stabilizers that anticipate and limit the vulnerabilities to financial crises.
Extent: 328 pp
Hardback Price: $135.00 Web: $121.50
Publication Date: 2016
ISBN: 978 1 78536 956 8
Availability: In Stock
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  • Asian Studies
  • Asian Economics
  • Economics and Finance
  • Asian Economics
  • Financial Economics and Regulation
Recent events, such as capital flow reversals and banking sector crises, have shaken faith in the widely held belief in the benefits of greater financial integration and financial deepening, which are typical in advanced economies. This book shows that emerging economies have occasionally weathered the storm best, despite the supposed burden of ‘weak institutions’.

Written by leading scholars and practitioners, the authors demonstrate that a better policy framework requires reliable indicators of vulnerability to financial instability. Using empirical evidence and case studies, the twelve chapters stress the necessity of improved policy tools and automatic stabilizers that anticipate and limit the vulnerabilities to financial crises. Cross-border capital flows, international reserves and foreign exchange markets are covered in depth.

This timely book offers an insightful overview and policy solutions to the issues surrounding macroprudential regulation of economies in a globalized world. It is required reading for students and scholars of international finance and regulation.
Contributors: S. Cho, R. Cifuentes, S. Claessens, S.R. Ghosh, M.S. Gochoco-Bautista, J.-H. Hahm, A. Jara, D. Jeong, K.-C. Jung, D. Kang, J. Lee, J.-E. Lee, A. Mason, A. Munro, C. Nam, M. Reddell, C. Rhee, H.S. Shin, S. Suh


Contents:

1. Introduction and Overview
Dongsoo Kang and Andrew Mason

2. Macroprudential Policies: Indicators and Tools
Hyun Song Shin

3. Business and Financial Cycles in Emerging Markets: Lessons for Macroprudential Policies
Stijn Claessens and Swati R. Ghosh

4. Capital Controls: A Pragmatic Proposal
Maria Socorro Gochoco-Bautista and Changyong Rhee

5. Irrational Expectations, Financial Amplification and Prudential Capital Controls
Sangwon Suh and Jinsoo Lee

6. The Optimal International Reserves with Sudden Stop Risks
Kyu-Chul Jung

7. International Reserves for Emerging Economies
Jong-Eun Lee

8. Foreign Currency Liquidity Risk and Prudential Regulation of Banks
Sungbin Cho and Joon-Ho Hahm

9. Investment Patterns of Foreign Bank Branches in Korea and Their Role in the Foreign Exchange Market
Dongsoo Kang and Daehee Jeong

10. The Role of Reserves in a Small Open Economy: The Case of New Zealand
Anella Munro and Michael Reddell

11. Facing Volatile Capital Flows: The Role of Exchange Rate Flexibility and Foreign Assets
Rodrigo Cifuentes and Alejandro Jara

12. Risk Hedging in Korea’s Financial Markets: The Impacts of Foreign Investment
Changwoo Nam

Index