Rich nations’ policies merit oversight: IMF members

IMF member nations, acknowledging resistance from emerging markets to limits on capital controls, said rich nations’ policies that spur large capital outflows that could harm other economies also need oversight.

The steering committee of the International Monetary Fund, comprised of finance officials from around the world, addressed the increasingly contentious issue as emerging markets grapple with an inflationary inflow of “hot money” that they blame on low interest rates in the United States and other advanced economies.

“Giving due regard to country-specific circumstances and the benefits of financial integration, such an approach should encompass recommendations for both policies that give rise to outward capital flows and the management of inflows,” the panel of IMF member nations said in a communiqué.

The IMF this month endorsed use of capital controls, a tool once considered anathema to its free-market philosophy, but advanced countries want to establish a framework to monitor the policies governments use, an approach emerging markets oppose.