IMF Managing Director Christine Lagarde has cited the shift on capital controls as an illustration of the fund’s attempts to "modernize," reports Rastello. Some modernization, preventing capital from moving freely.
What's really going on here is the IMF attempting to expand its interventionist role for the benefit of the banksters. Not only is the IMF in favor of controls, but, surprise, in favor of playing a role in designing them. From the report accompanying the IMF announcement:
The Fund is well-placed to provide relevant advice and assessments to its members
in close cooperation with country authorities and other international organizations.
Chandra Duggirala MD emails about the long play going on here:
Looks like the official line "third world countries benefit from capital controls in the short term" is the guise under which the broke first world governments want to impose capital controls to prevent capital migration out of EU, US and Japan.The report sure indicates this is what is behind this new support:
In light of the externalities and spillovers of national policies, international policy coordination can help to mitigate risks, improve the effectiveness of policy responses, strengthen welfare and stability, and enhance the effective operation of the international monetary system...
Capital flows to emerging economies have historically mainly comprised foreign direct investment (FDI), although portfolio and “other investment” (mainly bank-related) have increased substantially since 2003. Indeed, the bulk of the increase in global capital flows during 2003-2007 comprised short-term inflows, including both portfolio and other investment.
It's another reason to have some funds outside the country, now.