Capital Account Liberalization : Does Advanced Economy Experience Provide Lessons for China?

The initial post World War II pursuit of capital account liberalization (CAL) by advanced economies was Europe-centric, with roots in a broader political rather than economic agenda of greater European integration. In continental Europe, CAL was ad...

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Main Author:	Chelsky, Jeff
Format:	Brief
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ADVANCED COUNTRIES ADVANCED COUNTRY ADVANCED ECONOMIES ADVANCED ECONOMY BASKET COMPOSITION BOND BOND MARKET BORDER CAPITAL FLOWS CAPITAL ACCOUNT CAPITAL ACCOUNT CONVERTIBILITY CAPITAL ACCOUNT LIBERALIZATION CAPITAL CONTROLS CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKET CAPITAL MARKET LIBERALIZATION CAPITAL MARKETS CAPITAL MOVEMENT CAPITAL MOVEMENTS CAPITAL RULES COMMON MARKET COMMUNICATIONS TECHNOLOGY COMPETITIVE DEVALUATION COMPETITIVE DEVALUATIONS COMPLEX INSTRUMENTS CROSS-BORDER CAPITAL CURRENCY BASKET CURRENT ACCOUNT CURRENT ACCOUNT CONVERTIBILITY CURRENT ACCOUNT TRANSACTIONS DEPOSITS DEREGULATION DEVELOPING COUNTRIES DOMESTIC BONDS DOMESTIC FINANCIAL SECTOR DOMESTIC INSTITUTIONAL INVESTOR ECONOMIC DISRUPTION ECONOMIC GROWTH ECONOMIC POLICY ECONOMIC STABILITY EXCHANGE RATE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL FLOWS FINANCIAL INNOVATION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SECTOR DEVELOPMENT FINANCIAL SYSTEM FIXED EXCHANGE RATES FLOATING EXCHANGE RATE FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN INSTITUTIONAL INVESTOR FORWARD MARKET GLOBAL FINANCE GLOBAL FINANCIAL CENTERS GLOBAL FINANCIAL FLOWS HOLDINGS INSTITUTIONAL INVESTOR INSURANCE INSURANCE COMPANIES INTERNATIONAL MONETARY FUND INTERNATIONAL RESERVE ISSUANCE LIBERALIZATION OF CAPITAL LIBERALIZATION OF CAPITAL MOVEMENTS LIBERALIZATION OF TRADE MARKET ACCESS MARKET HOLDINGS MONETARY FUND MOVEMENT OF CAPITAL OPEN CAPITAL ACCOUNT PEER PRESSURE PERIODS OF STRESS POLITICAL ECONOMY POVERTY REDUCTION PRIVATE DOMESTIC PRIVATE FINANCIAL SECTOR PUBLIC SECTORS RESERVE CURRENCY SECURITIES SECURITIES MARKET SHORT-TERM CAPITAL SINGLE MARKET SINGLE_MARKET SOCIAL DEVELOPMENT STOCK MARKET TRADING TRANSPARENCY TREATY UNILATERAL LIBERALIZATION
Online Access:	http://documents.worldbank.org/curated/en/2012/02/15822799/capital-account-liberalization-advanced-economy-experience-provide-lessons-china http://hdl.handle.net/10986/10054

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recordtype	oai_dc
spelling	okr-10986-100542021-04-23T14:02:48Z Capital Account Liberalization : Does Advanced Economy Experience Provide Lessons for China? Chelsky, Jeff ADVANCED COUNTRIES ADVANCED COUNTRY ADVANCED ECONOMIES ADVANCED ECONOMY BASKET COMPOSITION BOND BOND MARKET BORDER CAPITAL FLOWS CAPITAL ACCOUNT CAPITAL ACCOUNT CONVERTIBILITY CAPITAL ACCOUNT LIBERALIZATION CAPITAL CONTROLS CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKET CAPITAL MARKET LIBERALIZATION CAPITAL MARKETS CAPITAL MOVEMENT CAPITAL MOVEMENTS CAPITAL RULES COMMON MARKET COMMUNICATIONS TECHNOLOGY COMPETITIVE DEVALUATION COMPETITIVE DEVALUATIONS COMPLEX INSTRUMENTS CROSS-BORDER CAPITAL CURRENCY BASKET CURRENT ACCOUNT CURRENT ACCOUNT CONVERTIBILITY CURRENT ACCOUNT TRANSACTIONS DEPOSITS DEREGULATION DEVELOPING COUNTRIES DOMESTIC BONDS DOMESTIC FINANCIAL SECTOR DOMESTIC INSTITUTIONAL INVESTOR ECONOMIC DISRUPTION ECONOMIC GROWTH ECONOMIC POLICY ECONOMIC STABILITY EXCHANGE RATE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL FLOWS FINANCIAL INNOVATION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SECTOR DEVELOPMENT FINANCIAL SYSTEM FIXED EXCHANGE RATES FLOATING EXCHANGE RATE FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN INSTITUTIONAL INVESTOR FORWARD MARKET GLOBAL FINANCE GLOBAL FINANCIAL CENTERS GLOBAL FINANCIAL FLOWS HOLDINGS INSTITUTIONAL INVESTOR INSURANCE INSURANCE COMPANIES INTERNATIONAL MONETARY FUND INTERNATIONAL RESERVE ISSUANCE LIBERALIZATION OF CAPITAL LIBERALIZATION OF CAPITAL MOVEMENTS LIBERALIZATION OF TRADE MARKET ACCESS MARKET HOLDINGS MONETARY FUND MOVEMENT OF CAPITAL OPEN CAPITAL ACCOUNT PEER PRESSURE PERIODS OF STRESS POLITICAL ECONOMY POVERTY REDUCTION PRIVATE DOMESTIC PRIVATE FINANCIAL SECTOR PUBLIC SECTORS RESERVE CURRENCY SECURITIES SECURITIES MARKET SHORT-TERM CAPITAL SINGLE MARKET SINGLE_MARKET SOCIAL DEVELOPMENT STOCK MARKET TRADING TRANSPARENCY TREATY UNILATERAL LIBERALIZATION The initial post World War II pursuit of capital account liberalization (CAL) by advanced economies was Europe-centric, with roots in a broader political rather than economic agenda of greater European integration. In continental Europe, CAL was addressed mostly through the adoption of multilateral instruments and codes. In contrast, CAL by the United States and United Kingdom was pursued unilaterally, motivated by their status as global reserve currency issuers and global financial centers. China's situation is fundamentally different. China today has no equivalent to the European political motivation for CAL or the domestically driven financial motivation of the United States or the United Kingdom. And while China may have long-term aspirations to be a global reserve currency issuer, the extent to which it internationalizes its currency is constrained by powerful domestic economic and political interests that continue to benefit from an export-led growth model underpinned by a pegged and undervalued exchange rate, both of which are difficult to maintain with an open capital account. Alongside China's overarching concern with the maintenance of financial and economic stability, these factors imply a different path for China than paths taken by advanced economies, with significant acceleration in the gradual pace of liberalization unlikely without accelerated development of domestic constituencies that traditionally support CAL. 2012-08-13T10:17:05Z 2012-08-13T10:17:05Z 2012-02 http://documents.worldbank.org/curated/en/2012/02/15822799/capital-account-liberalization-advanced-economy-experience-provide-lessons-china http://hdl.handle.net/10986/10054 English Economic Premise; No. 74 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Brief Publications & Research East Asia and Pacific China
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ADVANCED COUNTRIES ADVANCED COUNTRY ADVANCED ECONOMIES ADVANCED ECONOMY BASKET COMPOSITION BOND BOND MARKET BORDER CAPITAL FLOWS CAPITAL ACCOUNT CAPITAL ACCOUNT CONVERTIBILITY CAPITAL ACCOUNT LIBERALIZATION CAPITAL CONTROLS CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKET CAPITAL MARKET LIBERALIZATION CAPITAL MARKETS CAPITAL MOVEMENT CAPITAL MOVEMENTS CAPITAL RULES COMMON MARKET COMMUNICATIONS TECHNOLOGY COMPETITIVE DEVALUATION COMPETITIVE DEVALUATIONS COMPLEX INSTRUMENTS CROSS-BORDER CAPITAL CURRENCY BASKET CURRENT ACCOUNT CURRENT ACCOUNT CONVERTIBILITY CURRENT ACCOUNT TRANSACTIONS DEPOSITS DEREGULATION DEVELOPING COUNTRIES DOMESTIC BONDS DOMESTIC FINANCIAL SECTOR DOMESTIC INSTITUTIONAL INVESTOR ECONOMIC DISRUPTION ECONOMIC GROWTH ECONOMIC POLICY ECONOMIC STABILITY EXCHANGE RATE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL FLOWS FINANCIAL INNOVATION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SECTOR DEVELOPMENT FINANCIAL SYSTEM FIXED EXCHANGE RATES FLOATING EXCHANGE RATE FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN INSTITUTIONAL INVESTOR FORWARD MARKET GLOBAL FINANCE GLOBAL FINANCIAL CENTERS GLOBAL FINANCIAL FLOWS HOLDINGS INSTITUTIONAL INVESTOR INSURANCE INSURANCE COMPANIES INTERNATIONAL MONETARY FUND INTERNATIONAL RESERVE ISSUANCE LIBERALIZATION OF CAPITAL LIBERALIZATION OF CAPITAL MOVEMENTS LIBERALIZATION OF TRADE MARKET ACCESS MARKET HOLDINGS MONETARY FUND MOVEMENT OF CAPITAL OPEN CAPITAL ACCOUNT PEER PRESSURE PERIODS OF STRESS POLITICAL ECONOMY POVERTY REDUCTION PRIVATE DOMESTIC PRIVATE FINANCIAL SECTOR PUBLIC SECTORS RESERVE CURRENCY SECURITIES SECURITIES MARKET SHORT-TERM CAPITAL SINGLE MARKET SINGLE_MARKET SOCIAL DEVELOPMENT STOCK MARKET TRADING TRANSPARENCY TREATY UNILATERAL LIBERALIZATION
spellingShingle	ADVANCED COUNTRIES ADVANCED COUNTRY ADVANCED ECONOMIES ADVANCED ECONOMY BASKET COMPOSITION BOND BOND MARKET BORDER CAPITAL FLOWS CAPITAL ACCOUNT CAPITAL ACCOUNT CONVERTIBILITY CAPITAL ACCOUNT LIBERALIZATION CAPITAL CONTROLS CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKET CAPITAL MARKET LIBERALIZATION CAPITAL MARKETS CAPITAL MOVEMENT CAPITAL MOVEMENTS CAPITAL RULES COMMON MARKET COMMUNICATIONS TECHNOLOGY COMPETITIVE DEVALUATION COMPETITIVE DEVALUATIONS COMPLEX INSTRUMENTS CROSS-BORDER CAPITAL CURRENCY BASKET CURRENT ACCOUNT CURRENT ACCOUNT CONVERTIBILITY CURRENT ACCOUNT TRANSACTIONS DEPOSITS DEREGULATION DEVELOPING COUNTRIES DOMESTIC BONDS DOMESTIC FINANCIAL SECTOR DOMESTIC INSTITUTIONAL INVESTOR ECONOMIC DISRUPTION ECONOMIC GROWTH ECONOMIC POLICY ECONOMIC STABILITY EXCHANGE RATE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL FLOWS FINANCIAL INNOVATION FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL SECTOR DEVELOPMENT FINANCIAL SYSTEM FIXED EXCHANGE RATES FLOATING EXCHANGE RATE FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN INSTITUTIONAL INVESTOR FORWARD MARKET GLOBAL FINANCE GLOBAL FINANCIAL CENTERS GLOBAL FINANCIAL FLOWS HOLDINGS INSTITUTIONAL INVESTOR INSURANCE INSURANCE COMPANIES INTERNATIONAL MONETARY FUND INTERNATIONAL RESERVE ISSUANCE LIBERALIZATION OF CAPITAL LIBERALIZATION OF CAPITAL MOVEMENTS LIBERALIZATION OF TRADE MARKET ACCESS MARKET HOLDINGS MONETARY FUND MOVEMENT OF CAPITAL OPEN CAPITAL ACCOUNT PEER PRESSURE PERIODS OF STRESS POLITICAL ECONOMY POVERTY REDUCTION PRIVATE DOMESTIC PRIVATE FINANCIAL SECTOR PUBLIC SECTORS RESERVE CURRENCY SECURITIES SECURITIES MARKET SHORT-TERM CAPITAL SINGLE MARKET SINGLE_MARKET SOCIAL DEVELOPMENT STOCK MARKET TRADING TRANSPARENCY TREATY UNILATERAL LIBERALIZATION Chelsky, Jeff Capital Account Liberalization : Does Advanced Economy Experience Provide Lessons for China?
geographic_facet	East Asia and Pacific China
relation	Economic Premise; No. 74
description	The initial post World War II pursuit of capital account liberalization (CAL) by advanced economies was Europe-centric, with roots in a broader political rather than economic agenda of greater European integration. In continental Europe, CAL was addressed mostly through the adoption of multilateral instruments and codes. In contrast, CAL by the United States and United Kingdom was pursued unilaterally, motivated by their status as global reserve currency issuers and global financial centers. China's situation is fundamentally different. China today has no equivalent to the European political motivation for CAL or the domestically driven financial motivation of the United States or the United Kingdom. And while China may have long-term aspirations to be a global reserve currency issuer, the extent to which it internationalizes its currency is constrained by powerful domestic economic and political interests that continue to benefit from an export-led growth model underpinned by a pegged and undervalued exchange rate, both of which are difficult to maintain with an open capital account. Alongside China's overarching concern with the maintenance of financial and economic stability, these factors imply a different path for China than paths taken by advanced economies, with significant acceleration in the gradual pace of liberalization unlikely without accelerated development of domestic constituencies that traditionally support CAL.
format	Publications & Research :: Brief
author	Chelsky, Jeff
author_facet	Chelsky, Jeff
author_sort	Chelsky, Jeff
title	Capital Account Liberalization : Does Advanced Economy Experience Provide Lessons for China?
title_short	Capital Account Liberalization : Does Advanced Economy Experience Provide Lessons for China?
title_full	Capital Account Liberalization : Does Advanced Economy Experience Provide Lessons for China?
title_fullStr	Capital Account Liberalization : Does Advanced Economy Experience Provide Lessons for China?
title_full_unstemmed	Capital Account Liberalization : Does Advanced Economy Experience Provide Lessons for China?
title_sort	capital account liberalization : does advanced economy experience provide lessons for china?
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2012/02/15822799/capital-account-liberalization-advanced-economy-experience-provide-lessons-china http://hdl.handle.net/10986/10054
_version_	1764411653238030336

Capital Account Liberalization : Does Advanced Economy Experience Provide Lessons for China?

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