Liberalization of the Capital Account: Experiences and Issues

By Donald J Mathieson, Liliana Rojas-Suárez

June 1, 1992

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Donald J Mathieson, and Liliana Rojas-Suárez. Liberalization of the Capital Account: Experiences and Issues, (USA: International Monetary Fund, 1992) accessed September 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper reviews the experience with capital controls in industrial and developing countries, considers the policy issues raised when the effectiveness of capital controls diminishes, examines the medium-term benefits and costs of an open capital account, and analyzes the policy measures that could help sustain capital account convertibility. As the effectiveness of capital controls eroded more rapidly in the 1980s than in earlier periods, new constraints were placed on the formulation of stabilization and structural reform programs. However, experience suggests that certain macroeconomic, financial, and risk management policies would allow countries to attain the benefits of capital account convertibility and reduce the financial risks created by an open capital account.

Subject: Balance of payments, Capital account, Capital account convertibility, Capital controls, Capital flows, Foreign exchange, Real exchange rates

Keywords: Borrowing cost, Capital account, Capital account convertibility, Capital control, Capital controls, Capital controls bureaucracy, Capital flow, Capital flows, Current account, Exchange rate system, Financial system, Fixed interest rate, Flight capital, Global, Interest rate differential, Rate of inflation, Real exchange rates, U.S. dollar, WP

Publication Details

Pages:

60
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1992/046
Stock No:

WPIEA0461992
ISBN:

9781451973754
ISSN:

1018-5941

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