Question: Using recent global events, such as 2007-2008 Global Financial Crises (GFC) and COVID-19, explain why some countries remain concerned about removing restrictions on capital movements.

Using recent global events, such as 2007-2008 Global Financial Crises (GFC) and COVID-19, explain why some countries remain concerned about removing restrictions on capital movements.(8 marks)

B) What policy instruments can governments implement to safeguard against financial instability? Discuss the above within the context of the three safety nets listed below:

  1. Capital Requirements and asset restrictions.(4 Marks)
  2. Lender of last resort facilities.(4 Marks)
  3. Government - Structured restructuring and bailouts.(4 Marks)

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