Capital controls
Lifetime achievement award: Perng Fai-nan
Pre-emptive financial reforms combined with flexible monetary and forex policies have enabled Taiwan’s veteran governor to provide economic stability, even during turbulent times
Angola drops dollar for euro in new exchange rate regime
Kwanza depreciates 11.5% against the dollar following regime change
Book notes: The Right Balance for Banks, by William Cline
An interesting analysis of optimal capital requirements for G-Sibs, examining whether Basel III requirements will be enough to stem another financial crisis
Bank of Canada paper studies capital control motivations
Researcher designs policy rule to study whether capital controls are imposed with “mercantilist” or “macro-prudential” motivations
EMs should work to avoid ‘macro-prudential war’ – BIS article
Use of macro-prudential policies should be co-ordinated internationally for maximum effect, say Luiz Pereira da Silva and Michael Chui
Fed paper calls for rethink of conditions for setting capital controls
Policymakers should also consider how external shocks affect the borrowing capacity of the country, researchers say
Evolution of monetary policy in advanced economies spells trouble for emerging markets – paper
Research explores the impact future monetary policy will have on emerging markets, concluding many will be forced to implement defensive measures
BNM governor warns global bodies against ‘one-pill-cures-all’ mindset
Wealth of information from multilateral institutions has aided decision-making, but narrow definition of the ‘right’ policies could lead to worse outcomes, Muhammad Ibrahim says
Paper explores effects of capital controls on cost of international debt
Restrictions on capital inflows produce “substantial” corporate bond spreads but effects are mitigated for firms in EU or with English legal origins
Illicit capital flows a problem for countries without capital controls – Mminele
Mminele explains how capital controls benefited cross-border flow monitoring; Sarb deputy calls for a “more consistent” approach to capital flow management
Chile’s Marcel praises Argentine reforms
IMFC chairman says reforms have “paid off”, helping the country re-enter the global economic stage; lifting of capital controls and export restrictions will contribute to Argentina’s growth in 2017
Thinking on global capital flows is muddled – BIS’s Shin
BIS head of research says policies to guard against excess global liquidity should look at underlying causes, not symptoms such as capital flows; Fed’s Fischer acknowledges policy spillovers
Icelandic leaders clash on possible peg
Prime minister challenges finance minister’s assertion that the krona needs to be pegged; government launches review of exchange rate policy
Bahamas further relaxes capital controls
Specific sectors of the economy will be able to obtain foreign exchange from banks both at home and abroad; non-resident firms to gain credit from international banks licensed in the Bahamas
Iceland lifts capital controls
Controls on individuals, firms and pension funds lifted, though the central bank will retain controls on inflows to resist carry trade
Kazakhstan’s long path to inflation targeting
After a slow start, the National Bank of Kazakhstan’s implementation of inflation forecast targeting is beginning to mature. By Warren Coats
Nigeria’s central bank rolling back forex restrictions
Allocation rules are scrapped under the new regime, while all forex dealers must open outlets at airports to aid travellers; additional forex is to be made available for tuition and medical expenses
Bitcoin exchange halts service after PBoC clampdown
BTC123 becomes first exchange in China to halt services due to ongoing investigation by government agencies into virtual currency; cuts rates on wealth products
IMF delay forces National Bank of Ukraine to keep forex controls
Central bank to leave foreign exchange controls in place until political instability subsides and reforms are under way; IMF acknowledges progress, but says more is needed before the third review
Renminbi drops to six-year low
Figures from Safe show a net $44.7 billion worth of payments in the currency left China in November
Central Bank of Iceland gains new powers as more controls lift
Central bank given new powers over information gathering as legislation establishes next phase of capital control liberalisation
Capital outflows look manageable as Iceland moves to lift controls – central bank
A “stress test” of potential outflows implies the Icelandic financial system and central bank reserves will cope when capital controls are lifted; the government bill prepares to release funds
Argentinian central bank removes $5m dollar conversion cap
New measures aim to make it easier for businesses to acquire dollars; bank removes cap on dollar conversion and reduces paperwork involved
Iceland expands policy framework with capital flow tool
Central bank embraces idea of monetary policy dilemma, not trilemma, imposing reserve requirements on certain types of capital flows into the economy