In June 2010, South Korea and Indonesia announced several policy measures to regulate potentially de-stabilising capital flows which could pose a threat to their economies and financial systems. South Korea kicked off the process on 13 June when it announced a series of currency controls to protect its economy from external shocks. The new currency controls are much wider in scope than foreign exchange liquidity controls announced earlier in 2009. Indonesia quickly followed suite on 16 June when its central bank deployed measures to control short-term capital inflows.

The policy measures introduced by South Korea’s central bank have three major components, these being: restrictions on currency…

Just days before the G20 summit in Toronto, South Korea and Indonesia announced several policy measures to regulate potentially destabilising capital flows which could pose a threat to their economies and financial systems. The policy measures announced by South Korea and Indonesia assume greater significance because both countries are members of the G20. In 2010, South Korea chairs the G20.

On 13 June 2010, South Korea announced it would be imposing currency controls which are much wider in scope than foreign exchange liquidity controls announced earlier in 2009. The policy measures have three major components:

First, there are new restrictions on currency derivatives trades, including non-deliverable currency forwards, cross-currency swaps and forwards. New ceilings have been imposed on domestic banks and branches…

Within three days of South Korea imposing currency controls, Indonesia (a member of G-20) unveiled several policy measures to regulate potentially destabilizing capital flows. The policy announcement by Indonesia is the latest initiative by emerging markets to tame speculative money which could pose a threat to their economies and financial systems.

On June 16, 2010, Bank Indonesia, country’s central bank, announced the following policy measures:

1. To make short-term investments less attractive, there will be a one-month minimum holding period on Sertifikat Bank Indonesia (SBIs) with effect from July 7, 2010. During the one-month period, ownership of SBIs cannot be transferred. Issued by central bank, the one-month SBIs are the favorite debt instruments among foreign…

On June 13, 2010, South Korea announced a series of currency controls to protect its economy from external shocks. The new currency controls are much wider in scope than foreign exchange liquidity controls announced earlier in 2009.

The imposition of currency controls by the Korean authorities has to be analyzed against the backdrop of the global financial crisis. Despite its strong economic fundamentals, South Korea witnessed sudden and large capital outflows due to deleveraging during the global financial crisis. It has been reported that almost US$65 billion left the country in the five months after the collapse of Lehman Brothers in September 2008. South Korea’s export-oriented economy also suffered…

The massive investments by private equity firms coupled with an initial public offer (IPO) by SKS Microfinance have ignited a debate about the ethics and objectives of microfinance institutions (MFIs) in India.

The SKS Microfinance, the largest MFI in India with substantial investments by private equity firms and hedge funds, is planning to raise Rs.11000 million ($250 million) through an IPO. According to media reports, the original promoters of SKS Microfinance have sold part of their stake to a hedge fund thereby making a 12-fold profit even before an IPO. This shrewd act by promoters and top management not merely raises doubts about their long-term commitments but, more importantly,…