ABSTRACT. Mohanty and Scatigna contend that in a number of countries volatility in capital flows has been associated with speculative currency attacks, resulting in large changes in the exchange rate, high inflation and substantial loss of output. Andersen and Moreno remark that there is strong empirical evidence that external shocks are far more important in developing economies than in developing countries. Mihaljek says that standard monetary tools to deal with capital inflows may have to be supplemented by unconventional policy tools such as special privatization accounts and export earnings stabilization funds. Hawkins argues that the progressive easing of capital controls and the development of debt markets have undermined interest rate controls.