Kazuo Ueda: Cross-border capital flows and the role of the IMF and central banks in the evolving international monetary system

Remarks by Mr Kazuo Ueda, Governor of the Bank of Japan, at the International Monetary Fund (IMF) Event "Asia and the IMF: Resilience through Cooperation", Tokyo, 5 March 2025.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

Thank you for inviting me here to celebrate this important milestone. As we discuss the future challenges and opportunities of the International Monetary Fund (IMF), it is worth noting that the 80 years since the creation of the Bretton Woods system has witnessed economic growth with the unprecedented expansion of trade in world history. Throughout this period, the IMF has consistently played a key role in promoting global cooperation and maintaining the stability of the international monetary system, even after the collapse of the Bretton Woods system in 1971.

I will start my remarks by reviewing the response of central banks and the IMF to the Asian economic crisis in the late 1990s. Then, I will explore how we can reap the benefits and avoid the pitfalls of cross-border capital flows in an era of geopolitical uncertainty.

I. Capital Flows and the Asian Economic Crisis

Cross-border capital flows have benefits and drawbacks. There is a broad consensus that inflows of capital are beneficial to recipient countries, as they can make up for deficiencies in long-term risk capital for financing investment. Indeed, by attracting foreign direct investment (FDI) from advanced countries, Asian emerging economies have been on a strong growth trend as a global hub for manufacturing supply chains. Capital flows can also be beneficial to the sending countries, offering investment opportunities for the savings generated by aging populations that have been typically seen in Japan.