Global Capital Rules

The IMF has now put its stamp of approval on capital controls, thereby legitimizing the use of taxes and other restrictions on cross-border financial flows. Now the task is to devise the traffic rules needed in a world where different sovereigns regulate finance in diverse ways.

CAMBRIDGE – It’s official. The International Monetary Fund has put its stamp of approval on capital controls, thereby legitimizing the use of taxes and other restrictions on cross-border financial flows.

Not long ago, the IMF pushed hard for countries – rich or poor – to open up to foreign finance. Now it has acknowledged the reality that financial globalization can be disruptive – inducing financial crises and economically adverse currency movements.

So here we are with yet another twist in the never-ending saga of our love/hate relationship with capital controls.

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