§ Ms DrownTo ask the Chancellor of the Exchequer what assessment he has made of the conclusion of the recent IMF report on the value of capital controls. [114714]
§ Miss Melanie JohnsonThe IMF report of 18 November 1999 helpfully advances interactional discussion on capital controls. The report makes clear that capital controls are no substitute for sound macroeconomic policies, and that strong prudential policies play an important role in orderly and successful capital account liberalisation.
The Government believe that open capital markets can bring huge economic benefits, and support efforts to encourage orderly, progressive capital account liberalisation. The Government recognise that large short-term capital movements can be destabilising, and believe that the benefits of liberalisation are best enjoyed in countries which have embarked upon properly sequenced economic reform. Sound macroeconomic policy, open and credible institutions and procedures and a healthy financial sector are essential pre-conditions for orderly capital account liberalisation.
At the Cologne Economic Summit, the UK Government and our G7 partners urged the IMF to continue its work on the appropriate pace and sequencing of capital market liberalisation, and to explore other issues related to the Fund's role in facilitating an orderly approach to liberalisation.