Second, the effects of capital inflows, whatever their cause, on emerging market economies are not predetermined, but instead depend greatly on the choices made by policymakers in those economies. In some emerging markets, policymakers have chosen to systematically resist currency appreciation as a means of promoting exports and domestic growth.
One of the reasons was that our old toolkit had several shortcomings. Some instruments were not available, or could only be used in limited ways. These shortcomings became very clear when Dutch financial group SNS REAAL, ran into problems in 2013. The government had to step in, and the banking and insurance group was nationalized.