Derivatives in International Capital Flows
This paper will discuss the role of derivative products in international capital flows, especially in providing a means of both reducing and enhancing market risks associated with given net flows. It will emphasize how derivatives can be used to evade risk-control or prudential regulation, circumvent capital controls, drive the dynamics of currency instabilities, and obscure true risk positions and thereby undermine the usefulness of balance of payments capital account categories.
Feldstein, Martin (ed.) International capital flows, National Bureau of Economic Research Conference Report series. Chicago and London: University of Chicago Press, 1999.