Published By: United Nations Department of Economic and Social AThere is a renewed consensus on the need to re-regulate international capital movements. But there is a collective action problem, which puts developing countries at a particular disadvantage. Countries often have been reluctant to use capital controls, fearing a possible backlash from the markets, as was the case when Brazil implemented capital controls in the fall of 2009. There is also a risk that if one country imposes regulations unilaterally, capital will be diverted to other countries, exacerbating problems elsewhere. Coordinated and concerted regulation of capital account flows is thus an important element of capital account management. It is time for the international community to support countries’ efforts, including facilitating regional coordination, in the use of capital controls to stem the devastating impact of volatile private capital.
Author(s): United Nations Department of Economic and Social Affairs | Posted on: Jan 31, 2016 | Views()