Emergingmarket economies in which such financial market infrastructure is still in an early stage of development should consider the use of prudential regulations that discourage capital inflows, especially short-term capital flows, along the lines of the approach formerly in place in Chile.
Such regulation of capital flows may be appropriate in the period before robust domestic institutions and sound policies are fully in place and tested by experience. The Process The Asian financial crises generated several initiatives aimed at preventing or better managing future crises. The academic and policy communities have sought a better understanding of the causes and transmission mechanisms of crises.