The international monetary fund (IMF) issued a its executive board to some of the emerging market countries deal with capital into the experience of meeting minutes. The summary points out, has been carried out to some of the appropriate macroeconomic policy emerging market countries, they can implement prudential capital control measures to cope with massive capital inflows.
For decades, the IMF has been to support the global capital flows free base camp, adhere to the free flow of capital can improve the configuration of resources in the world, the outflow country and into the countries will benefit concept. Why the current IMF had changed the stick to decades of creed, announced it is planning emerging market countries capital inflow management framework?
IMF approval of capital controls include: first, the 2004 to 2007 years, emerging market countries are now facing another large-scale capital into the tidal wave. In view of the developed countries and emerging market countries two camps disparity dc hats between economic growth in developed countries, would continue to implement a looser monetary policy, and emerging market countries have to by raising rates to fight inflation pressure to, carry the long-term existence will make emerging market nations continue to face capital inflows; Second, as the IMF in the related report points out, and several rounds of massive capital inflows before different, the capital into the mainstream is speculative and volatility strong portfolio investment, rather than direct investment and bank loans. The volatility of the portfolio investment will give emerging market countries banking system and capital market stability cause more serious threat; Third, in the wake of the global financial crisis in judah, as the world's most important multilateral financial institutions, the IMF is not willing to see in two or three years, emerging market countries as capital flow reversal and be thrown into a financial crisis. If the crisis broke out again, the IMF as a financial warning and aid organization's reputation will again tumbled, the legitimacy of its existence and will continue to be questioned.
However, we must also see clearly, the IMF has not quite to change their positions. IMF to capital controls support, has a series of prerequisite. IMF actually put forward a emerging market countries to deal with the international capital flows into triple policy framework. First of all, emerging market countries should first to develop domestic financial market and to improve their economic and financial system to deal with the impact of capital flows elastic (for example to bank system implementation macro prudent supervision, etc), to absorb capital inflows and let capital inflows for financial deepening and economic growth services; Second, emerging market countries should through the accumulation of foreign currency reserves (and written policy implementation), its sunglasses shop currency to appreciate, reduce its interest rates, implement the deflating finance macro economic means to deal with or inhibit capital inflows; Finally, only when the above policy failed to take effect or in certain circumstances cannot use, the IMF didn't have suggested the direct capital controls.
IMF must capital controls practical significance is limited. First, it is just the emerging market countries implementing capital controls a wave after ratification. In fact, since 2009, including Brazil, India, South Korea, Malaysia, Taiwan, etc, emerging economies have had to implement the including capital flows into the lowest taxes, the investment period, the foreign currency reserve capital control measures, etc. IMF to capital controls support still lack of a prospective and guidance; Second, the IMF to emerging market countries implementing capital control measures to a series of condition, including exchange rates are not people underestimate, foreign exchange reserves have too high and economic overheat can't cut interest rates, the premise condition, including China, to some countries is not so much to encourage implementation capital controls, than the manufacturing of the implementation of the capital controls new barrier; Third, the IMF to key focus on capital LiuRuGuo (emerging market countries) to the above, and continue to the short-term capital source (developed countries) loose monetary policy it, again it exposed the IMF macro monitoring function "lame" trouble.
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