BIS central bankers’ speeches  3  Managing capital inflows Despite the practical challenges associated with managing capital inflows, we should be careful not to conclude that limiting capital mobility is a first-best policy outcome. The recent financial crisis certainly highlighted the fact that financial markets are prone to speculative excesses and behavior that may exacerbate systemic risk.
But, as central bankers and supervisors, we must remain humble about our ability to preempt market forces in ways that predictably enhance welfare. An alternative to limiting capital mobility is for countries to rely on more-standard policy tools as an initial line of defense against the challenges posed by capital flows.