Edited by Dongsoo Kang, Senior Fellow, Department of Financial Policy, Korea Development Institute, South Korea and Andrew Mason, Professor Emeritus of Economics, University of Hawaii at Manoa and Adjunct Senior Fellow, East-West Center, Hawaii, US

• Contents:1. Introduction and OverviewDongsoo Kang and Andrew Mason2. Macroprudential Policies: Indicators and ToolsHyun Song Shin3. Business and Financial Cycles in Emerging Markets: Lessons for Macroprudential PoliciesStijn Claessens and Swati R. Ghosh4. Capital Controls: A Pragmatic ProposalMaria Socorro Gochoco-Bautista and Changyong Rhee5. Irrational Expectations, Financial Amplification and Prudential Capital ControlsSangwon Suh and Jinsoo Lee6. The Optimal International Reserves with Sudden Stop RisksKyu-Chul Jung7. International Reserves for Emerging EconomiesJong-Eun Lee8. Foreign Currency Liquidity Risk and Prudential Regulation of BanksSungbin Cho and Joon-Ho Hahm9. Investment Patterns of Foreign Bank Branches in Korea and Their Role in the Foreign Exchange MarketDongsoo Kang and Daehee Jeong10. The Role of Reserves in a Small Open Economy: The Case of New ZealandAnella Munro and Michael Reddell11. Facing Volatile Capital Flows: The Role of Exchange Rate Flexibility and Foreign AssetsRodrigo Cifuentes and Alejandro Jara12. Risk Hedging in Korea’s Financial Markets: The Impacts of Foreign InvestmentChangwoo NamIndex

Edited by Dongsoo Kang, Senior Fellow, Department of Financial Policy, Korea Development Institute, South Korea and Andrew Mason, Professor Emeritus of Economics, University of Hawaii at Manoa and Adjunct Senior Fellow, East-West Center, Hawaii, US

• Contents:1. Introduction and OverviewDongsoo Kang and Andrew Mason2. Macroprudential Policies: Indicators and ToolsHyun Song Shin3. Business and Financial Cycles in Emerging Markets: Lessons for Macroprudential PoliciesStijn Claessens and Swati R. Ghosh4. Capital Controls: A Pragmatic ProposalMaria Socorro Gochoco-Bautista and Changyong Rhee5. Irrational Expectations, Financial Amplification and Prudential Capital ControlsSangwon Suh and Jinsoo Lee6. The Optimal International Reserves with Sudden Stop RisksKyu-Chul Jung7. International Reserves for Emerging EconomiesJong-Eun Lee8. Foreign Currency Liquidity Risk and Prudential Regulation of BanksSungbin Cho and Joon-Ho Hahm9. Investment Patterns of Foreign Bank Branches in Korea and Their Role in the Foreign Exchange MarketDongsoo Kang and Daehee Jeong10. The Role of Reserves in a Small Open Economy: The Case of New ZealandAnella Munro and Michael Reddell11. Facing Volatile Capital Flows: The Role of Exchange Rate Flexibility and Foreign AssetsRodrigo Cifuentes and Alejandro Jara12. Risk Hedging in Korea’s Financial Markets: The Impacts of Foreign InvestmentChangwoo NamIndex

Edited by Dongsoo Kang, Senior Fellow, Department of Financial Policy, Korea Development Institute, South Korea and Andrew Mason, Professor Emeritus of Economics, University of Hawaii at Manoa and Adjunct Senior Fellow, East-West Center, Hawaii, US

• Contents:1. Introduction and OverviewDongsoo Kang and Andrew Mason2. Macroprudential Policies: Indicators and ToolsHyun Song Shin3. Business and Financial Cycles in Emerging Markets: Lessons for Macroprudential PoliciesStijn Claessens and Swati R. Ghosh4. Capital Controls: A Pragmatic ProposalMaria Socorro Gochoco-Bautista and Changyong Rhee5. Irrational Expectations, Financial Amplification and Prudential Capital ControlsSangwon Suh and Jinsoo Lee6. The Optimal International Reserves with Sudden Stop RisksKyu-Chul Jung7. International Reserves for Emerging EconomiesJong-Eun Lee8. Foreign Currency Liquidity Risk and Prudential Regulation of BanksSungbin Cho and Joon-Ho Hahm9. Investment Patterns of Foreign Bank Branches in Korea and Their Role in the Foreign Exchange MarketDongsoo Kang and Daehee Jeong10. The Role of Reserves in a Small Open Economy: The Case of New ZealandAnella Munro and Michael Reddell11. Facing Volatile Capital Flows: The Role of Exchange Rate Flexibility and Foreign AssetsRodrigo Cifuentes and Alejandro Jara12. Risk Hedging in Korea’s Financial Markets: The Impacts of Foreign InvestmentChangwoo NamIndex