Capital flows and financial crises

Relaxing regulations on international capital flows could favorably impact the economic growth of nations, as it offers opportunities for richer countries to finance investment projects that are crucial for struggling countries. However, it could also lead to systemic instability, contributing to a series of violent financial crises. Identifying and updating the rules and institutions that can increase the stability of the international monetary system, while ensuring that capital can truly contribute to sustainable economic development worldwide, remains probably one of the most urgent challenges facing policy makers.