Up until recently, massive capital inflows, combined with current account surpluses, have exerted pressure on emerging Asian economies currencies to appreciate against the US dollar, threatening the competitiveness of their export sectors. Capital inflows to Asia have been reduced recently due to the ongoing US subprime loan problem. However, once US financial stability is restored and the credit crunch eases, capital inflows to Asia will likely resume and in a big way, posing serious policy challenges, including for exchange rate policy, financial sector supervision and fiscal policy management.

How should individual countries deal with massive capital inflows? What regional cooperation initiatives can be introduced to best utilize capital inflows while maintaining prudent macroeconomic and financial-sector stability?

Panelists will provide their insights into the ADB Institute's work on this topic and debate the above questions.