As the IMF and Bank of England predict that increasing volatility of global capital flows will motivate widespread use of capital controls, academics and civil society organisations are calling for coordinated global solutions.
The economic crisis in Argentina in 2001 and Greece today share both similarities and differences, so we should be wary of stretching the comparison.
Argentina, Brazil and Costa Rica are among the countries that have recently implemented capital account regulations. This report reviews the evidence available on the impact of their measures, providing evidence of the usefulness of capital account regulations not only in achieving financial stability but also in preventing unwarranted appreciation of the exchange rate and increasing monetary policy space.
This report explains the drawbacks, especially for development, of policies to deregulate the movement of money across borders, and makes suggestions for a new pragmatic approach to regulation of financial flows to ensure stability and development.
While the G20 postponed decisions on issuing new special drawing rights (SDRs), the IMF-managed international reserve asset, the IMF completed its surveillance review and a new Fund report tackled the thorny issue of global imbalances.
The G20 released its conclusions for how countries should manage capital flows, while internal papers suggest the IMF’s slow moves to accept national regulations on international capital flows continues.
Notes meeting Alex Gibbs September 2011
Major developing countries have rebuffed the IMF's proposed framework on capital controls, or 'code of conduct' as it has been renamed. The board paper discussed in March drew fire from Brazil and India for being too prescriptive and suggesting that controls should only be used temporarily and as a last resort, but the policy will go ahead despite the acrimony.
Notes of the seminar of spring meetings 2011
Over the past year, World Bank chief economist Justin Lin has tried to reopen debate at the Bank over whether developing country governments should adopt active industrial policies, previously taboo at the institution.