The liberalization of capital movements, as desirable as it is, must go hand in hand with the establishment of sound and efficiently supervised financial systems; otherwise not only the countries which liberalize prematurely would suffer from a potential sudden reversal of capital flows and the ensuing exchange rate and economic crisis, but also the world economy as a whole would be hit.
What has changed is that, now the regional governments as well as regional corporations that have been shut out of the global markets have turned to  2  BIS Review 99/2008  the Trinidad and Tobago capital market for financing and in that way, have been able to maintain investment spending (Chart 11).