Front Matter

Front Matter

Author(s):
Akira Ariyoshi, Andrei Kirilenko, Inci Ötker, Bernard Laurens, Jorge Canales Kriljenko, and Karl Habermeier
Published Date:
May 2000
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© 2000 International Monetary Fund

Production: IMF Graphics Section

Typesetting: Joseph Ashok Kumar

Cataloging-in-Publication Data

Capital controls: country experiences with their use and liberalization Akira/Ariyoshi… [et al.].—Washington, D.C.: International Monetary Fund, 2000.

p. cm.—(Occasional paper, ISSN 0251-6365; no. 190)

Glossary of abbreviations.

Prepared by Akira Ariyoshi, Karl Habermeier, Bernard Laurens, İnci ötker-Robe, Jorge Iván Canales-Kriljenko, and Andrei Kirilenko.

Includes bibliographical references.

ISBN 1-55775-874-3

1. Monetary policy. 2. Capital movements. 3. Capital account. 4. Foreign exchange rates. 5. Capital market. 6. Financial crises. 7. Risk management. I. Ariyoshi, Akira. II. International Monetary Fund. III. Occasional papers (International Monetary Fund); 190. HG230.3.C364 2000

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Contents

The following symbols have been used throughout this paper:

  • … to indicate that data are not available:
  • — to indicate that the Figure is zero or less ihun hall the final digit shown, or that the item does not exist;
  • – between years or months (i.e., 1997–98 or January-June) to indicate the years or months covered, including the beginning and ending years or months;
  • / between years or months (i.e.. 1997/98) to indicate a crop or fiscal (financial) year.

“Billion” means a thousand million.

Minor discrepancies between constituent figures and totals are due to rounding.

The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice: the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.

Preface

The role that large reversals of capital inflows have played in the recent currency crises in Asia, Russia, and Latin America has led to a renewed interest in how capital controls and other policies could help reduce the volatility of capital flows. This paper aims to develop a deeper understanding of the role that capital controls may play in coping with volatile movements of capital and the issues that arise in the rapid liberalization of the capital account by reviewing the experiences of countries with the use of capital controls and liberalization of the capital account under different circumstances, including crisis situations. It also studies the relationship between prudential policies and capital controls, and illustrates how better prudential practices and accelerated financial reforms could address the risks involved in cross-border transactions, thus providing an alternative to capital controls.

The material in this paper was originally prepared for discussion in the IMF’s Executive Board in September 1999. It was prepared under my direction, by a staff team led by Akira Ariyoshi and consisting of Karl Habermeier, Bernard Laurens, Inci Otker-Robe, Jorge Iván Canales-Kriljenko, and Andrei Kirilenko; Matthew Fleming provided research assistance and Francine Koch, Claudia Mariel, Joanna Meza-Cuadra, and Fabienne Piccinni provided secretarial support. Marina Primorac edited the manuscript and coordinated the production of the publication.

The paper has benefited from comments of Executive Directors, colleagues in MAE, and in other departments in the IMF. The views expressed in the paper are those of the IMF staff and do not necessarily reflect the views of national authorities or IMF Executive Directors.

Stefan Ingves

Director

Monetary and Exchange Affairs Department

Glossary of Abbreviations

ADR

American depository receipt

ALLL

Allowance for loan and lease losses

AREAER

Annual Report on Exchange Arrangements and Exchange Restrictions

ATTR

Allocated Transfer Risk Reserves

NBER

National Bureau of Economic Research

BIBF

Bangkok International Banking Facilities

BIS

Bank for International Settlements

CAMEL

Capital, Asset, Management, Equity, Liquidity

EC

Economic Community

EMU

European Monetary Union

ERM

Exchange Rate Mechanism

ESAF

Enhanced Structural Adjustment Program

FEBC

Foreign Exchange Bearer Certificates of Deposit

FII

foreign institutional investor

FIYF

Fixed Income Yield Funds

FOGADE

Venezuelan Deposit Insurance Agency

GAAP

Generally Accepted Accounting Principles

GDP

Gross Domestic Product

GDR

Global Depository Receipt

GKO

Russian treasury bills

IAIS

International Association of Insurance Supervisors

ICERC

Interagency Country Exposure Committee

IOSCO

International Organization of Securities Commissions

LIBOR

London Interbank Offered Rate

MESDAQ

Malaysia Exchange of Securities Dealing and Automated Quotation

MICEX

Moscow Interbank Currency Exchange

MSCI

Morgan Stanley Capital Index

NBFI

nonbank financial institution

NRI

nonresident Indian

OFZs

Russian long-term federal bonds

SDDS

Special Data Dissemination Standard

URR

unremunerated reserve requirement

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