International Capital Flows: from Liberalization to Management

Bruno CABRILLAC * Deputy General Manager, Statistics, Research, and International Division, Banque de France. Contact: bruno.cabrillac@banque-france.fr.

Clément MARSILLI ** Économiste, chef du pôle de suivi des économies émergentes, Banque de France.Contact : Clement.MARSILLI@banque-france.fr. Les auteurs remercient Édouard Vidon, Vincent Fleurier, Sophie Rivaud et Luc Jacolin pour leurs commentaires et leurs suggestions. Cet article reflète les idées personnelles de leurs auteurs et n'exprime pas nécessairement la position de la Banque de France.

Sophie RIVAUD *** Cheffe de service adjointe du Service des relations monétaires internationales, Banque de France. Contact : sophie.rivaud@banque-france.fr.Les auteurs remercient Marie-Hélène Ferrer pour ses commentaires et ses suggestions. Cet article reflète les idées personnelles de ses auteurs et n'exprime pas nécessairement la position de la Banque de France.

After the collapse of the Bretton-Woods system, almost all advanced economies had, by the end of 80s implemented the floating exchange rate regime combined with capital flows liberalization. In emerging market economies, this mutation is still ongoing. Major financial disruptions due to both volatility and persistent procyclicality of flows have fueled the fear of floating and the reluctance to pursue the liberalization process. In addition, the two last global crises, namely 2008/09 and 2020, showed that sudden stops are related more to the global financial cycle than to country-specific fundamentals. International organizations, in particular the IMF, have adapted their recommendations: keeping financial account liberalization as the long-term objective but allowing for reversibility and integrating capital flows management measures in the economic policy toolbox.