High capital flow volatility and sudden stops are risky for emerging market economies. Capital controls, along with monetary policy, can help manage these risks. In a small open economy with financial frictions and sudden stops, the best monetary policy may not focus on price stability. During a crisis, policymakers may tax capital inflows, but this could harm welfare. With commitment, capital controls can involve taxes on current inflows and subsidies for future flows. The optimal policy should always aim for price stability, whether or not commitment is available.