There were critics of this path then too, but now it is widely accepted that capital account openness has to be approached with caution and in certain situations, capital controls can even constitute a useful policy tool. Essentially, we are wary of short term capital flows that usually feed asset price boom and are susceptible to sudden stops or reversals. 7.
Within this general framework, I now turn to our approach to capital account management in some detail. As you know, capital account transactions are transactions in assets and non-residents can hold domestic assets in three forms: equity, debt and immovable property. Investment in equity can further be classified into foreign direct investment and foreign portfolio investment.