International Monetary Fund economists, reversing the fund's past opposition to capital controls, urged developing nations to consider using taxes and regulation to moderate vast inflows of capital so they don't produce asset bubbles and other financial calamities. It said emerging markets with controls in place had fared better than others in the global downturn.(emphasis mine)
The recommendation is the IMF's firmest embrace of capital controls and a reversal of advice it gave developing nations just three years ago. The IMF has long championed the free flow of capital, as a corollary to the free flow of trade, to help developing countries prosper. But the global financial crisis has prompted the fund to rethink long-held beliefs. It recently suggested the world might be better off with a higher level of inflation than central bankers now are targeting.
I think that a lot of this has to do with the Asian financial crisis 13 years ago, and the fact that the only nation to implemented capital controls, Malaysia, was through the crisis with a lot less pain than their Asian neighbors.
It only took them 13 years, and an increasingly hostile response from the developing world, for them to get the message.
Well, it's to their credit that it happened before some high level official visiting a 3rd world nation in crisis was actually lynched by an angry crowd, which puts them ahead of American investment bankers, Larry Summers, and Timothy Geithner, I guess.
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