(Reuters) - Policy-makers in countries that generate large capital flows need to be more aware of the impact their decisions can have on the global economy, a paper published by the International Monetary Fund said on Tuesday.

The IMF said the 2007-2009 financial crisis has led to a reconsideration of how sudden flows of money across borders can affect economies and puts more onus on assessing how policy can create multilateral problems.

A breakdown in the domestic stability of a large country can spill over into stress in other countries and even to the global system as a whole, the IMF paper said, adding that the transmission of such risks has not always been appreciated.

National authorities may have limited understanding of the multilateral transmission of their policies, or lack incentives to fully internalize their cross-border effects, it said.

Among its recommendations, the IMF urged assigning the highest priority to completing and fully implementing the national and international regulatory and supervisory reforms now under way to try to reduce cross-border risks.

The paper said policy-makers should more fully consider the potential impact that cross-border flows pose. That would potentially help bodies like the Group of 20, which has already raised concerns about the effects of sudden cross-border flows, take a larger role in monitoring the effect of capital flows.

Including the multilateral dimension would provide a clearer basis for international policy collaboration to enhance global stability, the IMF said.

The paper said the IMF has the mandate and the tools to help better understand the global drivers of capital flows and the impact of national policies on them. It said the IMF should take the policy impact into consideration as part of its bilateral and multilateral surveillance, and aim to develop specific policy advice for managing capital flows in future.