As the process of applying for approval of foreign exchange was largely eliminated, authorities were also required to strengthen regulatory, supervisory, inspection and monitoring roles to prevent the illegal export of capital. The illicit flow of capital is currently a big challenge for most countries that have liberalised capital control measures, but that is a topic for another day. 7  4.
Conclusion In conclusion, I would like to reiterate the IMF’s views on the importance of maintaining sound policies and strong frameworks, including monetary policy and exchange rate flexibility, as the first line of defence against excessive capital flows. Robust macroprudential measures as well as capital flow management measures can serve as a supplementary defence mechanism, where warranted.