A Wrong Call From The Imf

The abrupt collapse of the Mexican peso eight months ago--an event that necessitated a $50 billion international bailout--is still echoing through the world financial system. Now comes a new report from the International Monetary Fund with a surprising--and disturbing--set of recommendations for avoiding similar disasters in the future. The IMF, which has traditionally favored free movement of capital across national borders, is now claiming that there are situations where it is advisable for governments "to influence the level and characteristics of capital inflows." Suddenly, the new role model of the developing world is not Mexico, which openly embraced foreign investment, but countries such as Chile, Colombia, and Malaysia, which impose tight controls on outside capital.

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