Examples of such prudential policies would include guidance on loan-to-value ratios, capital adequacy standards, and limits on net open foreign exchange positions.11 Reaping the full benefits of financial openness So where do we go from here? What needs to be done for countries to reap the full benefits of financial openness?
In my view, all countries must continue working toward improving the resilience of their domestic financial systems to better take advantage of the potential gains from free international financial flows. Policymakers should strive to mitigate financial distortions by improving the regulation and supervision of financial markets and institutions, encouraging market transparency, and setting rules to enhance corporate governance.