The IMF Needs to be More Flexible about Capital Controls
Nor Shamsiah Mohd Yunus, central bank governor of Malaysia, rightly warns against the deeply-rooted stigma attached to capital controls that can be helpful in pre-empting financial crises (“Malaysia backs option of capital controls”, October 17). As many emerging market economies in Asia and elsewhere are currently grappling with the challenges posed by volatile capital flows (large capital inflows followed by abrupt reversals), it is high time for the IMF to revisit its 2012 Institutional View that endorses capital controls as a last resort, imposed selectively on capital inflows, and on a temporary basis.
The Institutional View is a welcome departure from the IMF’s earlier rigid stance but…