Reflections now the dust has settled
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Reflections now the dust has settled

At the World Bank/IMF annual meetings in Hong Kong three years ago the powerful interim committee gave the IMF a green light for yet another mission. The fund was keen to promote unrestricted international capital movements.


But those were the days when money had just started to stampede out of Asia's crisis countries. It was a memorable case of bad timing.


During the crisis attitudes towards the free movement of capital hardened. Those who believe that capital account convertibility (CAC) would bring huge growth benefits to developing countries were on the defensive.


Officials concluded that India and China - two Asian countries with controls - escaped the crisis precisely because they don't have CAC.


Now with the crisis over some thinkers are debating the subject. An IMF paper released in May suggests that the truth is far more complicated than capital controls being either good or bad.


The difficulty is that CAC is not just a matter of economics but of politics too.


Malaysia, for example, imposed temporary controls on September 1, 1998, blocking the withdrawal of financial capital for one year.







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