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Capital Movements: Curse or Blessing?*
| Content Provider | Semantic Scholar |
|---|---|
| Author | Dooley, Michael P. Walsh, Carl E. |
| Copyright Year | 2001 |
| Abstract | Interest in capital controls has been a highly cyclical industry. As Tobin (1996) observed “The interest that occasionally arose (for his transactions tax proposal) came from journalists and financial pundits. It was usually triggered by currency crises and died out when the crisis passed from the headlines.” Financial crises have certainly been a frequent and painful feature of the international monetary system in recent years. The obvious welfare costs of crises have led to a general reevaluation of strategies for opening repressed financial systems to international competition. The limitations and fragility of private credit markets in developing countries should not have been a surprise. Financial markets in industrial countries are highly regulated and there is a very large and sophisticated literature on the market failures that make this regulation necessary. The primary objective for supervision and regulation in industrial countries remains the maintenance of financial stability. In this paper we note that the regulatory framework in industrial countries has evolved away from crude controls over insured banks' ability to compete for liabilities. Nevertheless, capital controls designed to limit insured residents ability to sell liabilities to nonresidents may be the best available prudential control in emerging markets today. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://people.ucsc.edu/~mpd/cap_movements.pdf |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
