6  L. Bini Smaghi, “The Challenges of Surveillance and Coordination,” speech delivered at the International Symposium of the Banque de France, Paris, 4 March 2011. BIS central bankers’ speeches  3  Capital flows will move to hasten that adjustment, which leads to the second policy challenge.
Capital flows Capital can be expected to flow, on a net basis, from advanced economies towards higher expected risk-adjusted returns in emerging-market economies. Such was the case during the last wave of globalization at the turn of the twentieth century when Canada, then an emerging economy, ran current account deficits averaging 7 per cent of GDP over three decades.