Subtitles section Play video
-
-
Haruhiko Kuroda, the governor of the bank of Japan said last week that
-
China should use capital controls to stabilize its currency.
-
Azerbaijan, Turkmenistan and Nigeria have all introduced or tightened capital controls this month,
-
formally much despise they may be making a comeback.
-
Policy makers often grapple with what is called the impossible trinity.
-
You can have your own monetary policy, you can have a floating exchange rate,
-
and you can have the free movement of capital.
-
But you can't have all three.
-
Often it's the free movement of capital that gets ditched first.
-
India brought in restrictions on foreign exchange markets in 2013,
-
and they were credited with helping to keep its currency stable.
-
Brazil used them temporarily on its fixed income market, apparently without much damage.
-
And in 2011, the international monetary fund published guidelines on how to use capital controls,
-
which was taken as quite a turnaround and as an endorsement.
-
Many investors and economists still dislike them because they can go so badly wrong.
-
Venezuela's dysfunctional currency regime is one example.
-
But capital controls are no longer the mark of the devil.
-
Christine Lagarde, the IMF's managing director was on the same panel as Mr. Kuroda
-
when he made his suggestion in Davos.
-
She didn't reject the idea and that's been taken as tacit approval.
-
Also this month Agustín Carstens, the governor of Mexico's central bank
-
said it was time for emerging markets' central bankers to become unconventional.
-
And China is already doing it.
-
It imposed restrictions on offshore bank accounts this month.
-
The fact is that the world's economic problems are becoming harder and harder to tackle
-
and policy makers are turning to whatever tools are in the tool box.