BWC Member David Lubin examines the increase in capital flows to emerging economies in a Financial Times article following the end of the war in Iran. Lubin explains how he expects this to develop an increase in “hot money,” referring to easily transferable flows traded by developing countries’ capital markets. He suggests that judicious use of capital controls could help manage the possibility of future boom-bust cycles in capital flows. Furthermore, Lubin concludes that reserve accumulation is likely to be the best way of protecting emerging economies from capital flows volatility, with judicious restrictions being essential to its effectiveness. 

To read the full article, click here.

All views expressed by members are their own and not reflective of the views of the Bretton Woods Committee.