On March 30, 2022, the International Monetary Fund published the Review of the Institutional View on the Liberalization and Management of Capital Flows. The review updates the IMF’s Institutional View (IV), adopted in November 2012, followed by guidance notes on capital flows added in April 2013 and December 2015. The IMF’s Institutional View is an important policy document because it provides an analytical framework for the Fund’s policy advice on liberalizing and managing capital flows.
Since its adoption, IMF staff members have applied the IV extensively throughout the Fund’s broad membership, providing policy advice on capital flow-related issues during Article IV consultations and lending programs with member countries. In addition, the Institutional View has been applied for technical assistance, capacity building, and multilateral surveillance.
A brief historical overview is necessary to comprehend the shifts in the IMF’s policies on liberalizing and regulating cross-border capital flows. Since its inception in 1944, the Fund has come a long way on the issue of capital controls. The IMF’s Articles of Agreement permitted countries to maintain capital controls, which most countries did during the Bretton Woods period that lasted from 1944 to 1971. Although the IMF’s Article VI (Section 3) recognizes the right of members to “exercise such controls as are necessary to
— source madhyam.org.in | Kavaljit Singh | Apr 5, 2022