Macroprudential regulation of international finance : managing capital flows and exchange rates 1. Introduction and overview Dongsoo Kang and Andrew Mason 2. Macroprudential policies: indicators and tools Hyun Song Shin 3. Business and financial cycles in emerging markets: lessons for macroprudential policies Stijn Claessens and Swati R. Ghosh 4. Capital controls: a pragmatic proposal Maria Socorro Gochoco Bautista and Changyong Rhee 5. Irrational expectations financial amplification and prudential capital controls Sangwon Suh and Jinsoo Lee 6. The optimal international reserves with sudden stop risks Kyu Chul Jung 7. International reserves for emerging economies at various angles Jong Eun Lee 8. Foreign currency liquidity risk and prudential regulation of banks Joon Ho Hahm and Sungbin Cho 9. Investment patterns of foreign bank branches in Korea and their role in the foreign exchange market Dongsoo Kang and Daehee Jeong 10. The role of reserves in a small open economy: the case of New Zealand Anella Munro and Michael Reddell 11. Facing volatile capital flows: the role of exchange rate flexibility and foreign assets Rodrigo Cifuentes and Alejandro Jara 12. Risk hedging in Koreas financial markets: the impacts of foreign investment Changwoo Nam. Recent events such as capital flow reversals and banking sector crises have shaken faith in the widely held belief in the benefits of greater financial integration and financial deepening which are typical in advanced economies. This book shows that emerging economies have occasionally weathered the storm best despite the supposed burden of weak institutions. Written by leading scholars and practitioners the authors demonstrate that a better policy framework requires reliable indicators of vulnerability to financial instability. Using empirical evidence and case studies the twelve chapters stress the necessity of improved policy tools and automatic stabilizers that anticipate and limit the vulnerabilities to financial crises. Cross border capital flows international reserves and foreign exchange markets are covered in depth. This timely book offers an insightful overview and policy solutions to the issues surrounding macroprudential regulation of economies in a globalized world. It is required reading for students and scholars of international finance and regulation