The Economic issues series was inaugurated in September 1996. Its aim is to make available to a broad readership of nonspecialists some of the economic research being produced in the International monetary fund on topical issues. The raw material of the series is drawn mainly from IMF Working papers, technical papers produced by fund staff members and visiting scholars, as well as from policy-related research papers. This material is refined for the general readership by editing and partial redrafting. The following paper draws on material originally contained in IMF Working paper 96/53, “Implications of a surge in capital Inflows: available tools and consequences for the conduct of monetary policy,” by Jang-Yung Lee, an economist in the IMF’s Monetary and exchange affairs department.