Due to large and unprecedented quantitative easing policies and the prevailing policy uncertainty in advanced economies, many emerging countries have faced large and excessively volatile short-term capital flows during the recent era. If not managed properly and timely, such flows can give rise to an amplified cycle of steady appreciation of the currency, a strong rise in asset prices, looser credit market conditions, and build-up of balance sheet risks. This fragility may eventually trigger a sudden reversal of such flows (often called “sudden stop”), leading to a sharp currency depreciation and a large contraction in credit and output. In turn, to reduce the build-up of financial stability risks and contain ‘excessive’cycles in credit market conditions, emerging countries have increasingly utilised macroprudential policy tools.