The Case for Re Regulating Capital Accounts

These may refer to flow of funds accounts or, again, capital accounts.

This is why capital account regulations are allowed under IMF rules, and why the attempt to introduce capital account convertibility into the IMF s Articles of Agreement was defeated in 1997.

History is littered with financial crises occurring in the wake of precipitous capital account liberalization.

NEW YORK Capital account regulations have been at the center of global financial debates for two years.

A serious discussion of global capital account regulations would benefit both advanced and emerging market economies.

It would like to see the internal capital market operate as much as possible.

None of this is to say that the risks of foreign capital flows have evaporated, and that emerging markets should throw open their capital accounts all at once.

20. Notes the importance of an orderly, gradual and well sequenced liberalization of capital accounts to strengthen the ability of countries to sustain its consequences so as to mitigate the adverse impact of the volatility of short term capital flows

There is a wide range of available capital account management tools, and it is best if countries use a portfolio of them.

In the recent IMF document, the Fund proposes a set of guidelines that countries should use for capital account regulations (which they call capital flow management measures, or CFMs).

That would be very difficult to manage without some form of capital account regulation.

Finally, any regulation in this area should recognize that capital account convertibility is not obligatory for the IMF s clients.

As a result, market oriented interest rate reform is now needed to help optimize capital allocation and support the development of China s financial market, thereby laying the groundwork for future capital account and exchange rate liberalization.

Open capital accounts may be replaced not by whimsical ad hoc interventions that heighten uncertainty and weaken confidence, but rather by predictable rules based constraints on financial capital flows.

A much better way forward is to rethink seriously the role of cross border capital account regulations.

But it is inducing massive capital flows to emerging markets, where they are generating asset price bubbles.

Initial capital

As above, firm value is enhanced when, and if, the return on capital exceeds the cost of capital.

A serious discussion of global capital account regulations would benefit both advanced and emerging market economies. The effectiveness of monetary expansion could be enhanced in advanced countries by reducing the leakages generated by the carry trade and other short term capital outflows.

The Art of Capital Flight

Damming Capital

The Capital Flow Conundrum

Capital flows and remittances

E. Financial capital and resilience

The portion of capital inflows that is not re exported represents net capital inflows.

And, to address volatile capital flows, countries should increase exchange rate flexibility, maintain adequate international reserves, and implement carefully designed capital controls.

The Siren Song of Capital Controls

Investment and private flows

(o) Working Capital Fund

One solution (already advocated by some, including me, and adopted to some extent by a few countries) is broader use of capital account regulations.

But the market forces that cause those currencies to appreciate do not work on the renminbi, because China has only very limited capital account convertibility.

Brazil has been aggressive in terms of capital restrictions, twice increasing its tax on financial inflows.

But none is to be found in the IMF s guidelines, even though it recognizes that capital account volatility is in a sense a negative externality inflicted upon recipient countries.

व श व क प ज क र ख फ र ट यर क ओर

Jacqueline Novogratz on patient capitalism

The reason lies in capital movements.

Finally, there is the path of public capital.

Surviving the Great Capital Flood

Raising capital is expensive.

The Temptation of China s Capital Account

List of tables

Before World War II, venture capital investments (originally known as development capital ) were primarily the domain of wealthy individuals and families.

This is why equity capital held by financial institutions typically is more than twice as expensive as debt capital and why these institutions try to minimize its use.

As a result of the SEC s inaction, money market funds will continue to operate outside the scope of bank style rules on capital and reserves, even though investors treat them like bank accounts.