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The International Monetary Fund has cemented a substantial ideological shift by accepting the use of direct controls to calm volatile cross-border capital flows, though continuing to warn that such measures should be “transparent, targeted and generally temporary”.
The policy, announced in a staff paper released on Monday, is a sharp change from the fund’s enthusiasm for liberalising capital accounts during the 1990s, and comes amid a growing willingness among governments to experiment with measures to restrain short-term financial flows.
Yet some officials and economists continue to argue that the IMF, which has gradually shifted its position on capital controls in recent years, has not gone far enough, and places too little blame on super-loose monetary policy in rich countries for encouraging volatile flows into emerging markets.
http://link.ft.com/r/J0VG55/
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