Global capital flows are increasingly herdlike and volatile, making it harder for emerging economies to lock down capital, the International Monetary Fund says.
The increased global power of bond funds, mutual funds and exchange traded funds, often underpinned by the savings of small investors, has made capital flows more fickle and risk-sensitive.
That means countries on the receiving end have to work harder to hold on to capital, said Tharman Shanmugaratnam, chairman of the IMF's steering committee.
Speaking at the end of the spring meeting of fund members, Tharman said they singled out increased volatility in capital movements as one of the key challenges for the global economy.
"That's not going to be a short-term phenomenon, that's going to be a continuing challenge," he said.
