The writer is managing director of the IMF

How can we make capital flows safer for emerging market economies? Finding the right response to that question is critical for financial stability, growth and jobs. The good news is that countries are benefiting from an abundance of overseas capital, which can be used to fund fresh ideas and vital infrastructure. But they are also facing episodes of high capital flow volatility, which can hurt financial stability and the prospects of businesses and households.

Addressing volatile capital flows can be a daunting task, because there is little consensus on the right combination and timing of policy measures. Consider the 2018 episode of capital outflows from emerging markets: Brazil and Malaysia intervened in foreign exchange markets to shore up their currencies. Colombia and South Africa barely intervened. Some central banks raised interest rates, while others did not. Heavy intervention often mitigated depreciation, but not always.