However, the volatility of exchange rates at times had destabilized trade flows.

Remittance flows have become an increasing source of foreign exchange for many developing countries and a potential source of development finance.

Efforts are also under way to update Indian legislation dealing with foreign exchange flows so as to more effectively address these concerns.

These capital flows can upset a country s economy as they cause its exchange and interest rates to behave in a volatile way.

In short, because the RTSS made cross border capital movements much easier, short term flows have become a major factor in determining the RMB s exchange rate. External shocks affect the offshore exchange rate first, and then feed through to the onshore exchange rate.

In October 2004, the Government of South Africa took further steps to facilitate outward FDI by abolishing exchange control limits on such flows.

(d) Conducting studies on member States' policies on growth, economic reforms, domestic resource mobilization, international financial flows, external debt and exchange rate management

In light of the above discussion on exchange rate management, some form of impediment to volatile financial flows seems warranted in most developing countries.

An agenda for action could deal with all generic issues related to enhancing productive capacities in trade, technology and investment flows and exchange of experience.

quot 4. Also notes the adverse impact of the volatility of short term capital flows, exchange rates and international interest rates on the debt situation of developing countries

The sustainability of a country's external debt is determined by the projected flows of revenues and expenditures, including those for servicing debt, as well as changes in exchange rates.

Capital flows

OFDI flows

Debt flows

Improvements in automatic reporting and exchange of information are being examined in the context of the (Fiscal) Committee's study of the use of withholding taxes and or exchange of information to enhance the taxation of cross border interest flows (2000 OECD report, preface and paras.

Total private flows

(b) Trade flows

D. Trade flows

A. Official flows

B. Private flows

D. Private flows

Their persistent growth and stability distinguish these flows from other private financial flows.

Fostering an enabling environment for development financial flows, including capital flows investment trade

However, these flows tend to be more volatile than official flows and pro cyclical.

Nor do large international reserves guarantee financial stability. There are better ways to enhance stability, from strengthening prudential supervision to taxing and controlling destabilizing capital flows and letting the exchange rate adjust.

Managing the exchange rate becomes much more difficult when capital is free to come and go as it pleases. But it is not impossible as long as policymakers understand the critical role played by the exchange rate and the need to subordinate capital flows to the requirements of competitiveness.

The project has been investigating the controversial issue of regulating short term capital flows. The capital flows can upset a country s economy when they cause its exchange and interest rates to behave in a volatile way. The Mexican and Thai economic crises are examples of this type of capital flow. 33. UNU WIDER has produced a book on this research entitled Short Term Capital Flows and Balance of Payments Crises.

Why Capital Flows Uphill

This river flows rapidly.

Investment and private flows

Flows to Chile doubled.

financial flows for development.

Capital flows and remittances

(g) Private investment flows

(e) Private investment flows

Transborder data flows compliance

15. Transborder data flows.

Aggregate net resource flows

(b) Trade flows 6

B. External resource flows

And life flows along

Emerging economies leaders fear spillover effects in commodity markets and distortions of exchange rates and capital flows that may compromise their own focus on financial stability. While it is difficult to track the cross border flows fueled by quantitative easing in the so called advanced world, these fears are far from groundless.

The open economic environment combined with a more realistic exchange rate and substantial investment incentives attracted unprecedented flows of both foreign aid and foreign investment which have helped to generate new employment opportunities.

There has been a radical shift in the overall financial flows, with market mediated investment and lending flows increasing dramatically and with significant decreases in official flows.

5, 58, 59 and 78) The Committee will continue to work on improvements in automatic reporting and automatic exchange of information in connection with the study of the use of withholding taxes and or exchange of information to enhance the taxation of cross border interest flows (ibid., para. 109 and preface).