Capital Account Liberalization - Benefits and Costs

One of the most important elements of financial markets' globalization is capital account liberalization. Joining the international financial markets can bring both benefits and costs to the given country. Having removed obstacles to the free flow of capital countries expect a more dynamic economic development in quantitative (owing to economic growth) and qualitative (a more competitive environment) aspects. Eliminating the remaining barriers leads, however, to the possibility of some distortions in the economy coming out, the loss of financial stability being the most important. The main aim of the paper is the presentation of benefits and costs which may appear in the country introducing capital account liberalization