Financial integration and capital account of Serbia in the long run

It is generally believed that the liberalization of the capital account causes many crises due to its volatility. Given the relative 'immaturity' of Serbia's financial market, additional caution is needed in capital liberalization and the careful management of large capital flows. In conditions of structural mismatch and high indebtedness, the opening of the capital account required careful attention and delicate moves of the economic policy makers. Systemic liberalization of Serbia's capital account begins with political changes in 2000. The political economy plays an important role in forming sufficient support for liberalization. This paper deals with measures taken to establish control over capital flows. It also analyzes the movement of sub-accounts of the balance of payments on which the quantity of capital assets is registered.