The opening of the capitals accounts can bring important benefits for the global economy. However, it can also generate significant costs. In fact, international finances have been at the center of economic crises. Recent crises have made evident the profound imperfections of the international capital market and the great vulnerability of developing economies to shocks from this market. The costs of this volatility are high for developing countries. There is a growing need to find new institutional arrangements that minimize the risks of foreign exchange and financial crises. This is, therefore, an opportune moment to rethink the international financial order and an ill-opportune moment for further liberalization of that market. We argue that the fundamental challenge for managing external vulnerability is to design appropriate instruments to manage prosperity at the international and domestic levels.
Keywords:
Financial Crises, International Financial System, Financial Volatility, External Vulnerability, Developing Countries
Author Biography
Ricardo Ffrench-Davis Muñoz, Instituto de Estudios Internacionales, Universidad de Chile
Asesor regional principal de la CEPAL; profesor Instituto Estudios Internacionales de la Universidad de Chile.
Ffrench-Davis Muñoz, R. (1998). Enfrentando y previniendo las crisis financieras. Estudios Internacionales, 31(123-124), p. 3–12. https://doi.org/10.5354/0719-3769.1998.15027
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