Questioning capital flow Setting conditions on monetary exchanges Managing level of capital flows Exercising capital control
The technical and institutional aspects of organizing a country's external liabilities and assets with the aim of choosing the best possible combination of risk and return consistent with the supply conditions in capital surplus countries. In a situation where all decisions were made by market forces alone, governments would not be involved in deciding how much their countries should borrow from abroad. In reality, governments need to be involved, both because the public sector tends to be the largest borrower and because the prices with which private companies are faced may be distorted by government policies, encouraging the private sector to borrow too much or too little. It is the responsibility of the monetary authorities to ensure the availability of foreign exchange.
Enormous sums sweep across the world's computer screens -- Â£30,000 million in one day during "Black Wednesday" when dealers forced the pound out of the European Monetary System. This is three time more than the whole of the Bank of England's reserves.
Often governments treat the level of capital inflows as a residual and frame their fiscal and monetary policies independently of their effect on debt level and structure.
At times governments may raise domestic interest rates so as to encourage capital inflows or discourage outflows; in some cases interest rates have been lowered in order to discourage inflows.
Effective management of foreign capital is not a substitute for sound macroeconomic management; it is an essential part of it.
The Encyclopedia of World Problems and Human Potential is a collaboration between UIA and Mankind 2000, started in 1972. It is the result of an ambitious effort to collect and present information on the problems with which humanity is confronted, as well as the challenges such problems pose to concept formation, values and development strategies. Problems included are those identified in international periodicals but especially in the documents of some 60,000 international non-profit organizations, profiled in the Yearbook of International Organizations.
The Encyclopedia includes problems which such groups choose to perceive and act upon, whether or not their existence is denied by others claiming greater expertise. Indeed such claims and counter-claims figure in many of the problem descriptions in order to reflect the often paralyzing dynamics of international debate. In the light of the interdependence demonstrated among world problems in every sector, emphasis is placed on the need for approaches which are sufficiently complex to encompass the factions, conflicts and rival worldviews that undermine collective initiative towards a promising future.
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