Capital Account Liberalization and Risk Management in India

14 Pages Posted: 25 Jan 2008

See all articles by Amadou Nicolas Racine Sy

Amadou Nicolas Racine Sy

International Monetary Fund (IMF) - International Capital Markets Department; Brookings Institution

Date Written: October 2007

Abstract

This paper takes a closer look at the prudential and regulatory measures needed to prepare India's financial system to manage the risks arising from fuller capital account convertibility (FCAC). The paper contributes to the debate on FCAC in two ways. First, it reviews the potential and existing financial stability challenges to FCAC in India. Second it studies how prudential regulation and supervision is addressing these challenges. The main conclusion is that regulatory and supervisory measures alone are not enough and will need to be complemented by improvements in Indian banks' risk management and further development of the domestic capital markets.

Keywords: Working Paper, Capital account convertibility, India, Risk management

Suggested Citation

Sy, Amadou Nicolas Racine, Capital Account Liberalization and Risk Management in India (October 2007). IMF Working Paper No. 07/251, Available at SSRN: https://ssrn.com/abstract=1087166

Amadou Nicolas Racine Sy (Contact Author)

International Monetary Fund (IMF) - International Capital Markets Department ( email )

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Brookings Institution ( email )

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