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Global economic policy uncertainty has increased since the financial crisis of 2007-09, negatively impacting cross-border capital inflows and raising the danger of contagion risks. A recent study shows how policymakers can mitigate these negative consequences using the policy tools at their disposal, particularly macroprudential policies. ....
Despite the large capital outflows during the Covid-19 crisis, emerging economies did not make extensive use of capital controls. Indeed, these have had limited effects on capital outflows, being more effective on inflows. This column shows that macroprudential measures on the financial sector, which are increasingly part of the policy mix, have a positive impact on outflows ....