The classical text book and, now fairly standard, condition precedent to full capital account convertibility is sound, robust and resilient financial system on the one hand, and the broad based convergence of a country on key macroeconomic parameters like inflation, nominal interest rates, current account deficit, gross fiscal deficit and outstanding debt as a percentage of GDP, on the other.
Procyclicality in policy making refers to financial developments and policies that add momentum to the economic cycle and have an amplifying effect on economic fluctuations. The procyclicality embodied in capital regulation and accounting standards was among the identified causes underlying the global financial crisis.