FACTBOX-Capital controls on the rise amid high liquidity

By Reuters Staff
June 30, 2010

HONG KONG, June 30 (Reuters) – Pledges in advanced economies to keep interest rates low for a long time have sent abundant liquidity looking for a home in emerging markets and other high growth areas.

But some policymakers are concerned that the inflows could prove destabilising and so have taken action.

Indonesia enacted a new set of controls this year, following moves by Brazil and Taiwan last year. South Korea has outlined a set of policies on currency derivates trading.

Following is a list of capital controls undertaken by economies whose asset returns and credit growth have benefited the most from cheap borrowing conditions in Britain, the euro zone, Japan and the United States in place since 2003.

The list excludes measures in place before 2003.

TYPE OF MEASURE COUNTRY

Tax:

Brazil (2008, 2009)

Unremunerated reserve requirements:

Argentina (2005-)

Colombia (2007-08)

Russia (2004-06)

Thailand (2006-08)

* Prudential-type capital controls:

Colombia (2004-05,07)

Croatia (2003,04-08)

India (2006-07)

Indonesia (2005)

+S.Korea (2004,06,08,10)

Peru (2008)

Romania (2005-06)

Russia (2004)

Turkey (2008)

** Administrative measures:

Argentina (2005-08)

China (2007)

Colombia (2004)

India (2003,06-07)

Indonesia (2005,10)

Mexico (2006)

Philippines (2007)

Russia (2004)

Slovenia (2007)

Taiwan (2009)

Thailand (2003,06,08)

Vietnam (2007)

Liberalization of outflows:

Argentina (2003-04,08)

Brazil (2005-06)

Bulgaria (2003,07)

Canada (2005)

Chile (2003,05,08)

China (2006-07)

Colombia (2003,05,08)

Croatia (2003,06-07)

Hungary (2007-08)

India (2003-04,06-07)

Indonesia (2007)

Korea (2005-08)

Latvia (2003)

Lithuania (2004)

Malaysia (2003-08)

Mexico (2007-08)

Moldova (2009)

Nigeria (2008)

Pakistan (2003,05)

Peru (2004,07-08)

Philippines (2004-05,07-08)

Poland (2007)

Romania (2003,07)

Russia (2004,06-07)

Singapore (2004)

Slovak Republic (2003-04)

Slovenia (2003-04)

South Africa (2003-08)

Sri Lanka (2003,06-08)

Thailand (2003,07-08)

Turkey (2006,08)

Vietnam (2006-07)

* Marginal reserve requirements on external borrowing; high

reserve requirements on foreign exchange liabilities; limited

foreign exchange lending to residents; other.

** Ceilings and maturity requirement for external borrowing;

limits on the amounts nonresidents can repatriate from their

investments; authorization requirement for nonresidents

investments.

+ South Korea plans to curb foreign currency borrowing, unveiled

on June 13, will probably be finalised in July.

SOURCE: International Monetary Fund, Reuters News

(Compiled by Kevin Plumberg)

((Reuters Messaging: kevin.plumberg.reuters.com@reuters.net

Email: kevin.plumberg@thomsonreuters.com; 852-2843-6370))

Keywords: CAPITAL CONTROLS/

Wednesday, 30 June 2010 01:38:30RTRS [nTOE65M064] {C}ENDS

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