PSI and capital outflow restrictions as unconventional tools for the resolution of international financial crises

2014 Fiscal Year Final Research Report

• Project/Area Number: 23530359
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Multi-year Fund
• Section: 一般
• Research Field: Public finance/Monetary economics
• Research Institution: The University of Tokyo
• Principal Investigator: ARAMAKI Kenji 東京大学, 総合文化研究科, 教授 (90295056)
• Project Period (FY): 2011-04-28 – 2015-03-31
• Keywords: PSI / 民間セクター関与 / 資本流出規制 / 国際金融危機

Outline of Final Research Achievements

The analysis of five cases involving unconventional measures (i.e., the Private Sector Involvement (PSI) (typically, the maintenance of credit exposures to crisis countries) and capital outflow restrictions) to cope with international financial crises triggered by an abrupt capital flow reversal (cases composed of four PSI cases in Korea, Brazil, Turkey and the Central and Eastern European countries (“Vienna Initiative”)) and one capital outflow restriction case in Iceland) have given implications such that these unconventional measures, if implemented effectively, can contribute to reducing capital outflows and stabilizing currency, and thereby help mitigate negative effects of the crisis on the real economy. It is also suggested that it will be an important task to reconcile the economic framework for the advanced economies which embraces the principle of free flow of capital and the risk control measures that may be adopted, particularly by small open advanced economies.

Free Research Field

国際金融