For now, capital controls are being contemplated by those countries with strong currencies and large capital inflows to keep money from flowing into these countries/currencies (Brazil, etc...).
Should the U.S. fiscal position not be dealt with, when will capital controls be considered for the U.S., KEEP MONEY FROM LEAVING?
Watch this closely, this is not a positive development at all.
From Bloomberg News:
Nations should be able to use capital controls as a last resort to manage inflows of money that threaten their financial stability, according to draft guidelines discussed last week by the board of the International Monetary Fund.
Such controls should be applied only after countries strengthen their banking systems and adopt economic measures such as building up reserves, tightening fiscal policies and lowering central bank interest rates, according to the draft guidelines, obtained by Bloomberg News.
“In the past, capital controls were not in our toolkit,” IMF Managing Director Dominique Strauss-Kahn said separately in a statement posted on the fund’s website. “Today, we see them more as part of the toolkit, although only in specific circumstances and not, of course, as a substitute for good macroeconomic policies.”
More here...
