Furthermore, the level of current account deficit in respect of emerging market economies that is generally considered as sustainable by the global financial markets may be lower than the sheer volume of capital inflows in these economies. It is sometimes suggested that encouraging outflows would be a good solution to manage surging inflows.
While there is some merit in this approach, liberalising outflows may not be of great help in the short run because a more liberalised regime generally attracts higher inflows. Hence, such a policy has to be combined with other measures which could help to effectively manage the flows.