Capital Account Convertibility and Financial Sector Reforms

There can be no doubt, however, that the risks associated with capital account opening can be potentially severe; nobody denies this. But the challenge is to keep a measure of balance between those risks (which are typically stressed by the domestic producers of financial services) and the corresponding benefits (which affect a less vocal group, the domestic consumers of those services).

This paper focuses on the liberalization of capital account and that of domestic financial sectors. Although it's true that macro economic environment was equally important before going into capital account liberalization the same is not dealt in this paper The paper is divided as follows Section 2 talks about Capital Account Convertibility, Section 3 is about Prudential and Supen'isoiy Concerns, Section 4 deals with the Problems in Financial Sector Reforms and Section 5 finally Conclude.