In the wake of the 2007–09 financial crisis and recession, we learned important lessons about the critical necessity of monitoring emerging financial vulnerabilities in a systematic fashion and taking corresponding prudential, macroprudential, and countercyclical policies to build resilience.
Chart 1:  Portfolio flows to emerging-market economies declined sharply during COVID-19 compared with previous shocks Cumulative daily non-resident portfolio flows to emerging-market economies $ billion 20 0 -20 -40 -60 -80 -100 -120 t+3 t+4 t+5 t+6 t+7 t+8 t+9 t + 10 Number of weeks since start of episode Global financial crisis (2008) Taper tantrum (2013) China sell-off (2015) Emerging-market economy sell-off (2018) COVID-19 (2020)  t  t+1  t+2  Sources: Institute of International Finance and Bank of Canada calculations  Last observation: April 3, 2020  While the situation has since stabilized, capital outflows could happen again when the largest economies start reducing the extraordinary stimulus put in place to deal with the pandemic.