Furthermore, financial bubbles are hard to detect in advance, and when they are finally evident, it may be too late to do anything because market participants themselves may rapidly cause their elimination through bets against them. A second cause for concern is that the factors that explain capital inflows, above all portfolio funds, can vary over time.
International experience confirms, time and again, that increases in capital inflows have ended invariably in sudden stops and even reversals. This can occur even if internal financial imbalances are not generated, for reasons that have nothing to do with the recipient country, as can be the case with the anticipation of tighter monetary conditions and an increase in global risk aversion.