WASHINGTON (dpa) – Booming East Asian nations should consider limits on the amount of capital coming into the region to avoid the kind of asset bubbles that spurred a massive economic crisis in the West, the International Monetary Fund (IMF) said.

The IMF, in excerpts of a report on lessons from the financial crisis, suggested more flexible exchange rates and tighter fiscal policies may not be enough to ease the risks associated with a sudden surge of capital into countries. Outright capital controls ''may have a role in complementing the policy toolkit,'' the IMF said.

The IMF warned that excessive inflows of capital - usually into countries with strong growth and high interest rates - can spark higher inflation and asset price bubbles, which will in turn threaten the economy's stability.

Asian powers like China have begun grappling with a possible build-up of excess capital from foreign investors as their economies recover faster than most industrial countries. Asian stocks and currencies have risen fast since the start of the year.

The flow of money into Western nations was believed to have fuelled housing bubbles and an over-reliance on debt over the past decade, eventually leading to a near-collapse of the entire financial industry in October 2008.

IMF economist Naoyuki Shinohara warned last week in Vietnam that ''excessive, short-term capital flow'' could threaten the Asia's economic recovery.

While capital inflows had yet to reach pre-crisis highs, ''there are already growing vulnerabilities'' in the global economy, said Effie Psalida of the IMF's Monetary and Capital Markets Department.

But the IMF warned that using capital controls carried their own risks. While it may be a good idea for one country, it could encourage too many others in the region to follow suit. An over- reliance on capital controls could derail the hoped-for rebalancing of the global economy.

To limit capital inflows, the IMF said countries should first consider tightening fiscal policy, boosting central bank reserves and encouraging more flexible exchange rates. China in particular has been criticized for keeping its currency undervalued.

Meanwhile, a Reuters report from Hong Kong said investors flocking to Asia's high-yielding bond markets should be mindful of fast-rising consumer prices that may force central banks to lift interest rates earlier than anticipated, according to Rajeev De Mello, head of Asian investments at Western Asset in Singapore.

Indonesian bonds, which outperformed the broader market in 2009, are among his top picks in Asia, along with India and South Korea because their currencies are expected to strengthen against the US dollar this year.

''I favor all Asian bond markets as currencies are likely to continue appreciating,'' De Mello, who helps manage $500 billion, said in an interview with Reuters. ''I prefer the bonds in countries where the markets have discounted sufficient policy tightening.''

His comments were made just as Singapore aggressively tightened its monetary policy as the economy grew at a record pace in the first quarter, while analysts say it also highlighted the authorities' concerns about inflationary pressures.

Central banks in India and Malaysia have raised key rates this year to curb inflation. China, Indonesia, the Philippines and Thailand are expected to start lifting rates in the next three to six months.