Ensuring regional capital account convertibility

Although it may be optional, regional capital account convertibility of national currencies will make a programme of monetary cooperation and a potential regional capital market really efficient. If capital account convertibility is implemented within a grouping, it should be accompanied by the creation of efficient cooperation schemes among concerned central banks. If capital flows go intraregional, also their monitoring should go intraregional. This monitoring is even more necessary if, because of the lack of central bodies in participant countries, cross-border clearing and settlement is executed between different commercial banks.

Such regional cooperation may concentrate on both the registering of flows and on concerted interventions if necessary. For the purpose of the first, statistical reporting should be reinforced in each country. For the purpose of the latter, central banks should agree on the circumstances under which intervention becomes necessary and on the modalities of such actions.

Regional capital account convertibility does not necessarily imply capital account convertibility towards the world ("global convertibility"). Developing regions are not always in the position to open up to global flows. Their desire for protection in this case is also in line with recent developments in the regulation of advanced markets where arguments in favour of partial re-regulation are strong.