The G-20’s Helpful Silence on Capital Controls

New Serie: THE NEW GLOBAL ECONOMY – Published on Project-Syndicate, by Jose Antonio Ocampo, Stephany Griffith-Jones and Kevin P. Gallagher, October 30, 2011.

(First my comment: hard liners will be of no help for any control and regulation. As long as people are not able to push through laws to globally control actual world’s mess, it will go on and on … with always peoples paying the bill … and many dying for. Again: only a global control will be effectively working, as the big excuse for zero change is this eternal economic competition, expressing mens love for powerplays, instead working together for the benefit of all. THIS cooperation we have to push through).  

… The IMF’s proposed guidelines recommend that countries deploy capital-account regulations only as a last resort – that is, after such measures as building up reserves, letting currencies appreciate, and cutting budget deficits. In response to these suggestions, an independent Task Force, made up of former government officials and academics, was established to examine the use of capital-account regulations and come up with an alternative set of guidelines for the use of such regulations in developing countries.

Among other findings and recommendations, our task force pointed out that in the cases where the IMF found capital-account regulations to be effective, such measures were part of a broader macroeconomic toolkit, and were deployed early on, alongside other measures, not as a “last resort.” Unless countries have signed trade and investment treaties that restrict the use of such regulations (and many have), the IMF’s Articles of Agreement give them full policy scope to manage capital flows as they see fit. Consigning such measures to “last resort” status would reduce the available options precisely when countries need as many tools as possible to prevent and mitigate crises … (full text).

Link: The New Global Economy, a new serie published on Project-Syndicate: Ten years ago, rich countries dominated the world economy, accounting for two-thirds of global GDP. Since then, their share has fallen to just over half. In ten years, it could decline to a mere 40%, with emerging markets producing most global output …

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