The Korea Times
amn_close.png
amn_bl.png
National
  • Politics
  • Foreign Affairs
  • Multicultural Community
  • Defense
  • Environment & Animals
  • Law & Crime
  • Society
  • Health & Science
amn_bl.png
Business
  • Tech
  • Bio
  • Companies
  • World Expo 2030
amn_bl.png
Finance
  • Companies
  • Economy
  • Markets
  • Cryptocurrency
amn_bl.png
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to the Editor
amn_bl.png
Lifestyle
  • Travel & Food
  • Trends
  • People & Events
  • Books
  • Around Town
  • Fortune Telling
amn_bl.png
Entertainment & Arts
  • K-pop
  • Films
  • Shows & Dramas
  • Music
  • Theater & Others
amn_bl.png
Sports
  • Hangzhou Asian Games
amn_bl.png
World
  • SCMP
  • Asia
amn_bl.png
Video
  • Korean Storytellers
  • POPKORN
  • Culture
  • People
  • News
amn_bl.png
Photos
  • Photo News
  • Darkroom
amn_NK.png amn_DR.png amn_LK.png amn_LE.png
  • bt_fb_on_2022.svgbt_fb_over_2022.svg
  • bt_twitter_on_2022.svgbt_twitter_over_2022.svg
  • bt_youtube_on_2022.svgbt_youtube_over_2022.svg
  • bt_instagram_on_2022.svgbt_instagram_over_2022.svg
The Korea Times
amn_close.png
amn_bl.png
National
  • Politics
  • Foreign Affairs
  • Multicultural Community
  • Defense
  • Environment & Animals
  • Law & Crime
  • Society
  • Health & Science
amn_bl.png
Business
  • Tech
  • Bio
  • Companies
  • World Expo 2030
amn_bl.png
Finance
  • Companies
  • Economy
  • Markets
  • Cryptocurrency
amn_bl.png
Opinion
  • Editorial
  • Columns
  • Thoughts of the Times
  • Cartoon
  • Today in History
  • Blogs
  • Tribune Service
  • Blondie & Garfield
  • Letter to the Editor
amn_bl.png
Lifestyle
  • Travel & Food
  • Trends
  • People & Events
  • Books
  • Around Town
  • Fortune Telling
amn_bl.png
Entertainment & Arts
  • K-pop
  • Films
  • Shows & Dramas
  • Music
  • Theater & Others
amn_bl.png
Sports
  • Hangzhou Asian Games
amn_bl.png
World
  • SCMP
  • Asia
amn_bl.png
Video
  • Korean Storytellers
  • POPKORN
  • Culture
  • People
  • News
amn_bl.png
Photos
  • Photo News
  • Darkroom
amn_NK.png amn_DR.png amn_LK.png amn_LE.png
  • bt_fb_on_2022.svgbt_fb_over_2022.svg
  • bt_twitter_on_2022.svgbt_twitter_over_2022.svg
  • bt_youtube_on_2022.svgbt_youtube_over_2022.svg
  • bt_instagram_on_2022.svgbt_instagram_over_2022.svg
  • Login
  • Register
  • Login
  • Register
  • The Korea Times
  • search
  • all menu
  • Login
  • Subscribe
  • Photos
  • Video
  • World
  • Sports
  • Opinion
  • Entertainment & Art
  • Lifestyle
  • Finance
  • Business
  • National
  • North Korea
  • 1

    Actor Song Joong-ki still hungry for new movie roles

  • 3

    S. Korea flexes military might in rare parade with US in central Seoul

  • 5

    BTS' Jungkook to drop 2nd solo single '3D'

  • 7

    4 in 10 Koreans experience overdue wages: survey

  • 9

    All BTS members renew contract with BigHit

  • 11

    Serial killer transferred to detention center in Seoul equipped with execution chamber

  • 13

    Deoksu Palace's reconstructed Dondeokjeon hall to open to public

  • 15

    Hyundai Steel decides to form steel pipe unit

  • 17

    LG Uplus, Hanwha develop ceiling-mounted EV charging system

  • 19

    EXCLUSIVELawmakers to submit resolution urging China to free N. Korean escapees

  • 2

    K-pop group Kingdom recalls album cover resembling Quran

  • 4

    Korea has world's highest senior poverty rate: data

  • 6

    Tanghulu captures hearts of Korean millennials and Gen Z

  • 8

    Harvest season arrives

  • 10

    Korean tennis player Kwon Soon-woo eliminated in 2nd round at Hangzhou Asiad

  • 12

    K-pop fans rally in Seoul against luxury brands' failure on climate action

  • 14

    Over half of Koreans want continuous strengthening of alliance with US: poll

  • 16

    Korean gov't faces international criticism for R&D budget cuts

  • 18

    Gov't to boost Korean language education for multiethnic students

  • 20

    SK earthon begins crude oil production in South China Sea

Close scrollclosebutton

Close for 24 hours

Open
  • The Korea Times
  • search
  • all menu
  • Login
  • Subscribe
  • Photos
  • Video
  • World
  • Sports
  • Opinion
  • Entertainment & Art
  • Lifestyle
  • Finance
  • Business
  • National
  • North Korea
National
  • Politics
  • Foreign Affairs
  • Multicultural Community
  • Defense
  • Environment & Animals
  • Law & Crime
  • Society
  • Health & Science
Wed, September 27, 2023 | 18:54
Business
IMF LeaningToward Capital Flow Control
Posted : 2010-03-16 16:59
Updated : 2010-03-16 16:59
Print PreviewPrint Preview
Font Size UpFont Size Up
Font Size DownFont Size Down
  • facebook
  • twitter
  • kakaolink
  • whatsapp
  • reddit
  • mailto
  • link


By Lee Hyo-sik
Staff Reporter

The International Monetary Fund (IMF) has become more lenient toward capital control which could change the landscape of the entire global financial system.

The shift in the IMF's attitude is likely to affect the course of Korea's international finance policies.

However, Seoul policymakers are split over how to control speculative "hot money."

A group of IMF economists, including Jonathan D. Ostry, published a report in February, saying it may be appropriate for emerging economies to control cross-border capital movements on conditions under which controls are justified.

The Washington-based organization had been a strong advocate over the years for the free flow of capital across the globe, opposing any measures by its members aimed at reining in capital flow worldwide.

"If the economy is operating near potential, if the level of reserves is adequate, if the exchange rate is not undervalued and if the flows are likely to be transitory, then use of capital controls - in addition to both prudential and macroeconomic policy - is justified as part of the policy toolkit to manage inflows," the IMF paper said.

It said such controls can retain potency even if investors devise strategies to bypass them, provided such strategies are more costly than the expected return from the transaction.

"Controls seem to be quite effective in countries that maintain extensive systems of restrictions on most categories of flow. For example, in the case of Chile and Colombia, controls do appear to have had some success in tilting the composition of inflow toward less vulnerable liability structures," it added.

Dani Rodrik, a Harvard University professor, argued that the IMF paper is an indication of a change to its long-held position on capital controls, calling it the end of an era in global finance.

"As late as November last year, IMF Managing Director Dominique Strauss-Kahn had thrown cold water on Brazil's efforts to stem inflows of speculative hot money and said that he would not recommend such controls as a standard prescription. But the paper says otherwise, stressing taxes and other restrictions on capital inflows can be helpful and they constitute a legitimate part of policymakers' toolkits," Rodrik told The Korea Times in his contribution.

He also said the IMF's policy note makes clear that controls on cross-border financial flows can be not only desirable, but also effective. "Capital controls are to prevent inflows of hot money from boosting the value of the home currency excessively, thereby undermining competitiveness.

"Another justification is to reduce vulnerability to sudden changes in financial-market sentiment, which can wreak havoc with domestic growth and employment."

Regarding the IMF's move, Korean policymakers have been giving mixed views. The Ministry of Strategy and Finance, said it will do more harm than good to the Korean economy.

But the Financial Services Commission (FSC), the nation's domestic financial policymaking body, has shown some interests in restricting capital flow in and out of Asia's fourth-largest economy.

"I do not think the Feb. 19 paper conveys the IMF's official position on capital controls. But it shows that the organization has become more lenient toward the issue. The Korean government will not introduce any steps that could curb capital movement in and out of the country," said Kim Ik-joo, director general of the finance ministry's international finance bureau.

In a meeting with foreign correspondents on March 8 in Seoul, Strategy and Finance Minister Yoon Jeung-hyun also said Korea will maintain an "openness and competition" principle in dealing with cross-border capital flows and has no plan to impose any controls.

However, FSC Chairman Chin Dong-soo said a Tobin tax on international financial transactions can help regulate the movement of hot money in and out of Korea if adopted worldwide.

The IMF research paper came as many emerging economies have increasingly suffered from movements of cross-border speculative funds, or "hot money," and the IMF has been looking into the issue.

China and other developing countries have seen a steep inflow of capital, bringing about a range of negative consequences to their economies. They are grappling with surging value of real estate properties and currencies, among other side effects.

In response, Brazil has imposed a Tobin tax on short-term cross-border capital transactions to stem inflow of hot money, with emerging economies moving to follow suit.

Chin said if an agreement is made, it will effectively reduce the flow of excessive cross-border liquidity, stressing that the biggest risk to the Korean economy has been the sudden international flow of capital.

leehs@koreatimes.co.kr
 
miguel
wooribank
LG
Top 10 Stories
1S. Korea flexes military might in rare parade with US in central Seoul S. Korea flexes military might in rare parade with US in central Seoul
2Korea has world's highest senior poverty rate: data Korea has world's highest senior poverty rate: data
3Gov't to boost Korean language education for multiethnic students Gov't to boost Korean language education for multiethnic students
4Seoul Welcome Week to return for first time since pandemic Seoul Welcome Week to return for first time since pandemic
5[INTERVIEW] Wellington mayor's love for Korean culture spurs collaboration INTERVIEWWellington mayor's love for Korean culture spurs collaboration
6For closer business ties between Korea, Vietnam For closer business ties between Korea, Vietnam
7Late Samsung chairman's love of animals helps change Korea's pet culture Late Samsung chairman's love of animals helps change Korea's pet culture
8BOK warns of worsening household debt situation BOK warns of worsening household debt situation
9Over 100 money changers face suspensions, fines, criminal charges Over 100 money changers face suspensions, fines, criminal charges
10POSCO International to enter US grain market POSCO International to enter US grain market
Top 5 Entertainment News
1[INTERVIEW] ONEUS returns as 'mermaid prince' INTERVIEWONEUS returns as 'mermaid prince'
2Rwandan artists bring diversity to Seoul's art scene Rwandan artists bring diversity to Seoul's art scene
3Kep1er unveils 'Magic Hour' with fresh perspective on love Kep1er unveils 'Magic Hour' with fresh perspective on love
4[INTERVIEW] With '30 Days,' Kang Ha-neul finds new level of comfort in acting INTERVIEWWith '30 Days,' Kang Ha-neul finds new level of comfort in acting
5K-pop group Kingdom recalls album cover resembling Quran K-pop group Kingdom recalls album cover resembling Quran
DARKROOM
  • Turkey-Syria earthquake

    Turkey-Syria earthquake

  • Nepal plane crash

    Nepal plane crash

  • Brazil capital uprising

    Brazil capital uprising

  • Happy New Year 2023

    Happy New Year 2023

  • World Cup 2022 Final - Argentina vs France

    World Cup 2022 Final - Argentina vs France

CEO & Publisher : Oh Young-jin
Digital News Email : webmaster@koreatimes.co.kr
Tel : 02-724-2114
Online newspaper registration No : 서울,아52844
Date of registration : 2020.02.05
Masthead : The Korea Times
Copyright © koreatimes.co.kr. All rights reserved.
  • About Us
  • Introduction
  • History
  • Contact Us
  • Products & Services
  • Subscribe
  • E-paper
  • RSS Service
  • Content Sales
  • Site Map
  • Policy
  • Code of Ethics
  • Ombudsman
  • Privacy Statement
  • Terms of Service
  • Copyright Policy
  • Family Site
  • Hankook Ilbo
  • Dongwha Group