In June 2018, the Council of the European Union gave the European Commission a mandate “to pursue WTO modernisation in pursuit of the objectives of making the WTO more relevant and adaptive to a changing world, and strengthening the WTO’s effectiveness”. A few months later, a group of 13 countries, which also included the EU, unveiled a process for WTO reform for “developing 21st century trade rules at the WTO”.

Couched under these broad-brush objectives lay the intent to alter the focus of the WTO fundamentally, to make the multilateral…

It is difficult to make any generalization on the countries’ experiences as significant heterogeneity exists across countries in terms of type, nature, sequencing, and intensity of capital controls. However, some notable trends are visible. For instance, over the last three decades, there has been a marked shift regarding preference over the types of capital controls, from the earlier quantitative restrictions to price-based controls. The growing preference for using price-based mechanisms is largely in tune with a market-based approach to financial regulation.

Further, a significant number of capital controls are associated…

Contrary to popular perception, both the developed and the developing countries have extensively used a variety of capital controls to restrict and regulate the cross-border movement of capital. Although the types of capital controls and their implementation varied from country to country, it would be difficult to find any country in the world that had not used these at some point or the other.

Modern capital controls in the form of taxes on the purchase of foreign assets came into existence in World War I as governments introduced special taxes…

The financial transaction tax is an issue that never goes away from the public agenda completely. It keeps coming back to the policy and political discussions in different forms across the world. Currently, the idea of a financial transaction tax (FTT) is gaining in popularity within the Democratic Party of the United States as a policy tool to curb excessive speculation and high-frequency trading that destabilizes markets; and to generate a significant amount of revenue to finance social programs such as free college tuition.

On March 5, Democrats in both…

The massive surge in capital inflows to emerging market economies (EMEs) following the 2008 global financial crisis has reignited the debate on the pros and cons of international capital mobility. While free movement of capital across borders can reduce the cost of capital, enable investments and allow investors to diversify their portfolio, it can also pose significant systemic risks in the recipient country with negative consequences for growth and development.

Large capital inflows in excess of domestic absorption capacity could result in rapid exchange rate appreciation, making exports more expensive…