WASHINGTON (Reuters) – The International Monetary Fund said on Wednesday it has updated its guidance on capital flow restrictions to allow member countries to impose pre-emptive measures to reduce the risks of abrupt capital outflows causing financial crises or deep recessions.
The IMF’s institutional view on capital flow measures was launched in 2012, in the wake of the 2008-2009 financial crisis, to allow for capital flow management measures and macroprudential measures in the event of capital surges.
Under the new guidance, countries would no longer have to wait until capital flow surges materialize under the new guidance. They could impose such measures to counter a gradual buildup of foreign-currency debt that is not backed by foreign currency reserves or hedges, the IMF said.
(Reporting by David Lawder)
