Capital controls can include restrictions on foreign currency bank accounts and on currency transfers; taxes or administrative limits on outflows of direct and portfolio investment; restrictions on foreign payments for ‘technical assistance’between connected firms; non-interest bearing ‘quarantines’ on investment inflows; controls on foreign borrowing, and multiple exchange rates determined by the priority of each type of investment. Managing these controls will burden the monetary authorities, but this task is not beyond the capabilities of most central banks. The most significant obstacle to capital controls is not technical: it is political.
Posted on: Wed, 26 Nov 2014 02:07:26 +0000
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