לאחרונה נושא המגבלות על העברת הון צף שוב לכותרות (רוסיה והקריפטו), ובחודש שעבר קרן המטבע גם עדכנה (באופן לא משמעותי מספיק) את המדיניות שלה בנושא. הסקירה שלהלן נוצרה על ידי לפני כמה שנים (כחלק מעבודה אקדמית) – החלק הראשון כלכלי יותר והשני סקירה משפטית בנושא זה:

1. The negative consequences of capital liberalization

Much has been written about the efficiency and aggregate growth that globalization has brought but in recent years economists have become increasingly aware that unrestrained capital flows may sometimes lead to the opposite result - the "contagious effect", that spread the Global Financial Crisis (GFC) through financial linkages, has focused on the need for capital controls in times of emergency, however, studies show that uncontrolled capital flows have adverse economic effects even in more calm times. Economists have found that the effect of FDI on the balance of payments in the long term may actually be negative, due to "high import content of foreign firms and profit remittances",[1]and that "Capital account liberalization episodes have statistically significant and long-lasting effects on income inequality" [2].

Yet, while there are still disagreements about the benefits and necessity of capital restrictions to solve the problems above, there is a broader consensus with regard to a problem called "hot money".

2.1 "Hot money"- description

Hot money[3] is short-term speculative investments, mainly through bonds, derivatives and short-term loans. Incoming hot-money will usually cause: asset prices in the receiving country to rise, inflation, "credit boom" and an appreciation of the currency which will harm competition. When hot-money leaves it leads to the opposite - fast depreciation in the value of assets (especially in countries without liquid international assets) and currency.

Studies have shown[4] a significant increase in capital fluctuations and volatility in exchange rates in recent years, due to this phenomenon.

2.2 Hot-money and the monetary policy of the developed countries

Recently it has become increasingly clear that one of the main causes of hot-money is the monetary policy of the developed countries - especially the unconventional one. The current economic reality of weak aggregate demand (due to aging and slowing productivity), globalization, high debt and low inflation, led to greater use of expansionary monetary policy and due to low interest rate – of quantitative easing (QE)[5]. These policy measures intend to restore growth and increase employment in the developed country but at the same time creates a number of effects on the developing countries, which, as detailed below, are not necessarily predictable or uniform[6]:

The first effect is that the increase in domestic demand in the developed country leads to imports from the developing countries. However, this depends on the elasticity of demand for imports in the developed country, and in addition increases the price of imports to the developing countries (the opposite effect). Therefore, the total outcome for the developing country depends on whether it is a "net exporter" and on the strength of trade ties with the developed country. Thus, for example, while reducing the interest rate in the US (or QE) may actually mean increasing net exports for China, it may have negative effects on other developing countries with which the US has weaker trade ties.

The second effect is on the exchange rate - the expansionary policy in the developed country (or reduction of interest rate) creates a flow of capital to the developing country and appreciation of its currency. Later expectation of an increase in the interest rate in the developed country will lead, as noted, to capital outflow and currency devaluation. This for example is what happened in the East Asian crisis in 1997.

The third effect is liquidity. The expansionary policy in the developed country leads to strong liquidity in the receiving country, but theoretically there should be a counter –influence so the effect is not entirely clear although empirically based.

Therefore, the overall effect of the expansionary policy of the developed country on the developing countries is not uniform and depends on a number of variables, as well as on the nature of the receiving countries.

2.3 Sovereign default and Monetary Sovereignty

It is quite clear[7] though, that poorer countries have fewer tools to deal with such spillovers and this due to weaker institutions to predict them and weaker "safety nets". Such countries (and stronger ones) may eventually find themselves in a crisis leads to sovereign default or dependent on the aid of others as Lenders of Last Resort. Pistor[8] explains that in our credit-based financial global systems most states "compromise their sovereignty by permitting unlimited capital inflows denominated in currencies other than their own".

Due to "recognition and enforcement of foreign law", in the time of crises (and claims), countries don’t have the access to the money needed to serve sovereign debt (they don't have enough foreign exchange reserves and cannot print "state money" due to hyperinflation) and are in fact beholden to many private money holders and issuers too big to fail. These countries can only hope for help from other countries in order to avoid collapse of their financial systems. However, they can rely on such help only if they themselves pose a threat to global stability. This harms the sovereignty of the state and subordinates it to those entities or countries which could force it to seek help ex post. Therefore, capital liberalization and the legal system are in fact undermining the sovereignty of many countries that are forced to absorb the external effects of the global financial institutions from the developed countries. Pistor raises an important point, since, as the famous Corfu Channel case[9] emphasizes: "sovereignty is a notion that 'has its foundation in national sentiment and in the psychology of the peoples". However, Rodrik[10] stresses that this is not just a political issue, but that neo-liberalism has been proven as bad economy, exemplifies China and other countries that flourished as a result of globalization, but only because they knew how to limit capital flows. The same point was raised by Stiglitz[11] earlier when he noted that that Chile “is an example of a success of combining markets with appropriate regulation” and that in the early years of its move to neoliberalism, Chile imposed “controls on the inflows of capital, so they wouldn’t be inundated”.

In sum, capital liberalization has inevitable economic and other consequences for many countries, especially those to which capital flows. In an age of high debt and limited fiscal policy there is a growing consensus that there is an inevitable need to limit such flows through legal means called capital controls.

2. Capital controls

3

3.1 Types of Capital Controls

It is common to distinguish[12] between capital controls that “discriminate on the basis of residency” and macro-prudential measures that "discriminate" on the basis of currency in order to maintain stability. The first type includes, inter alia: foreign ownership restrictions (on domestic companies), restrictions on foreign loans and acquisitions, restrictions on FDIs and activity in the financial market, taxes on incoming capital and restrictions on the investment period of foreign investors or URRs (unremunerated reserve requirements). The second includes, inter alia: loan-to-value and debt-to-income regulations, restrictions on maturity of liabilities and restrictions on derivatives position, caps on asset acquisition and financial institution's foreign exchange positions and lending, loan to-deposit ratio limits, and taxes on foreign exchange transactions. Another distinction is between direct controls through administrative measures, such as restrictions, quotas and approvals, and between indirect controls - designed to make capital transfers more expensive - such as taxes and multi exchange rates for various transactions. The latter type is considered more efficient economically, because it involves less distortionary costs and makes it difficult to evade and to manipulate classification in order to circumvent quotas or prohibitions.

3.2 Examples of capital controls use

Economists estimate that Malaysia survived [13] Asia's 1997 crisis better than its neighbors due to capital controls. India responded to the US intention to end its QE policy and the Reserve Bank of India set a three-year holding period for foreign investment in order to avoid the expected damage from the capital flow. In 2010, Brazil imposed a tax on financial transactions tax with the aim of reducing incoming flow. China has recently tightened its capital controls (outwards) by limiting bank account transfers abroad (which may have affected housing prices in Australia). On the other hand, a recent proposal was made in the United States to impose some sort of capital control by increasing the taxation on Chinese investors, as part of the so-called trade war and the alleged exchange rate manipulations previously attributed to China[14].Greece imposed restrictions on the transfer of money to foreign banks and on withdrawals of money in ATMs in order to cope with running to the bank during its economic crisis in 2015 and similar restrictions was imposed in Cyprus, another European Union member, for several years following the crisis in 2013.

Iceland[15] may be an example of a small country (a member of the European Free Trade Area but not the European Union) that has not given up its monetary sovereignty, and when it found itself in a crisis simply let its banks fall. Due to the large capital inflows to the country, Iceland found itself, during the 2008 GFC, with large external debt of local banks but with tiny foreign exchange reserves. As stated, Iceland allowed its banks to fall but avoided default only because it imposed significant capital controls: it amended its Act No 87/1992 on Foreign Exchange (FX Act) - to allow only current account transactions and to limit potential cross-border transactions of the estates of its failed banks – and, later, it enacted another law to impose a high "stability" tax on these estate funds in case a creditors arrangement was not reached. This move eventually led to an arrangement with the foreign creditors and the removal of the capital controls.

Capital controls play therefore an important role to ensure financial stability and have been imposed and still imposed by countries in crises and before.

3.3 Cons of Capital Controls

There is no doubt that well-managed globalization[16] has economic advantages and that total isolation is neither desirable (economically) nor feasible. However, partial controls also have disadvantages that need to be considered. As mentioned, capital controls - mainly the direct ones – not only has domestic distortionary costs but also spillovers[17] on other developing countries (that will absorb the flows). For example, some argued[18] that this could be the case if Turkey would impose more severe controls which will lead to emerging market contagion.

Capital controls depend on the discretion of the regulator and therefore involve uncertainty as to the timing of their imposition or removal, which creates uncertainty among investors.[19] Correlation was also found with corruption due to the economic impact and attempts to circumvent the restrictions, especially in developing countries[20]. Another common argument is that granting legitimacy to the imposition of capital controls will lead to a slippery slope and will allow restrictions by some countries for competitive reasons, such as control of firms or intellectual property.[21] However, there are also counter arguments against all these[22].

3. The IMF institutional view on capital controls

Naturally, the official position of the IMF has evolved and changed since its establishment: During the Bretton Woods period the fund members used Capital Controls[23],but in the last decades of the globalization boom, the IMF has expressed an unfavorable view of their use.[24] This position changed again in 2010, after several countries reacted to the expansionary monetary policy of countries such as the US, England, and Japan, and in 2012 the fund has released a new institutional view[25] on capital controls. The position is now more liberal regarding the regulation of incoming capital flows (outflows only in times of severe crisis and as a supplementary measure), but emphasizes that the use should be made only after the macroeconomic policy has been exhausted, and only temporarily. In addition, the fund distinguishes macro-prudential measures and other Capital Controls, and advocates that the latter be imposed only in times of crisis. This position of the IMF reflects its understanding that large short term foreign capital flows may have negative implications such as appreciation of the domestic currency, accumulation of excessive foreign exchange reserves and inflation and financial instability due to assets bubbles. This position is criticized[26] tough, mainly because it does not provide a sufficient solution for relatively small developing countries. Another criticism is with regard to the distinction between the two types of capital control, which is sometimes unclear or justified and overlap. It seems that the IMF position is still developing with the findings of recent economic studies.

4. The international legal framework

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5

5.1 The IMF Articles of Agreement[27]

The IMF Articles determine its mandate and bind its members on condition of receiving assistance. Article VI: require capital liberalization (of payments only) and allows each member to exercise capital controls "as are necessary to regulate international capital movements, but no member may exercise these controls in a manner which will restrict payments for current transactions …"

The term "payments" is defined in Art XXX(d) to include: (1)"all payments due in connection with foreign trade, other current business, including services, and normal short term banking and credit facilities;(2) ... due as interest on loans and as net income ..;(3) … amortization of loans or for depreciation of direct investments; (4) moderate remittances for family living expenses".

The Article also states that "A member may not use the Fund's general resources to meet a large or sustained outflow of capital … and the Fund may request a member to exercise controls to prevent such use".

The IMF Articles do not allow the fund to condition the provision of assistance to its members in account liberalization, but in practice there is pressure to do so in order to obtain a "seal of approval" from the fund or it is done in the framework of consultation and supervision.[28]

It is worth noting that the Articles also refer to " Obligations Regarding Exchange Arrangements" and that Article IV provides that: “In particular, each member shall . . . (iii) avoid manipulating exchange rates or the international monetary system in order to prevent effective balance of payments adjustment or to gain unfair competitive advantage over other members . . .”

Some claim[29] that regulating capital movements, regardless of the intent or purpose, can also affect the exchange rate and can be interpreted as “manipulation”. Such classification may also be of importance to any contract that contradicts the capital restrictions, and this due to Article VIII(2)(b) (Avoidance of restrictions on current payments) which provides that :(b) Exchange contracts … which are contrary to the exchange control regulations of that member ... shall be unenforceable in the territories of any member".

Courts around the world have adopted two different approaches[30] to Article VIII(2)(b) - the narrow approach of the US courts (in which the developed countries favor), whereby only a contract "which entail the exchange of one currency for another ... shall be unenforceable" (as in Libra Bank v. Banco Nacional de Costa Rica[31]) and the broader approach (in developing countries and in Europe in the past).

5.2 The OECD Code of Liberalization of Capital Movements

The OECD Code is a "multilateral agreement on capital flow management and liberalization…"[32] It is binding for the OECD countries, and since 2012 is also open to non-OECD countries. The code applies to all long-and short-term capital movements between residents of OECD countries and it covers also FDIs (in addition, the OECD Code of Liberalization of Current Invisible Operations[33] cover cross-border trade for some sectors among them banking and financial services). The OECD Member countries waived their right to maintain capital controls under Article VI of the IMF Agreement, however in its updated introduction part it states that:

"The Code recognizes that capital controls can play a role in specific circumstances. But because “beggar-thy-neighbor” approaches can have negative collective outcomes, countries have agreed under the Code to well-tested principles such as transparency, non-discrimination, proportionality and accountability to guide their recourse to controls."

In its investment policy[34] guides, the OECD has given special reference to "a framework for coping with short-term capital flow volatility" and it was explained that each participating country was given the option to object to parts of the code according to its level of development, and that even without such reservations, steps can be taken through built-in flexibility clauses to deal with short-term capital flows. In addition, in 2016, adhering countries adopted terms of reference for a review of the Code with aim of strengthening it and adapting it to the current economic situation, and that "a particular area of interest is the treatment of capital flow measures that are used as macro-prudential measures". Therefore, it appears that the approach is similar to that of the IMF.

5.3 EU law

Article 63 of the Treaty on the Functioning of the European Union (TFEU)[35] prohibits restrictions on movement of capital and payments between EU member states, and between EU member states and third countries (Art 63(2)). Article 65 of the TFEU provides a safeguard on "grounds of public policy or public security” and Articles 66 and 64 with regard to third parties. Article 347 allows isolating problematic country in order to prevent the contagious effect. However, it seems that these safeguards allow Capital Controls only in times of crisis.

During the crises of Iceland (not EU member) a request was made to the EFTA court by an Icelandic citizen of the United Kingdom to declare that the capital control measures exercised by Iceland (prevented him from transferring Icelandic krónur, to Iceland) contradicts the provisions of Article 43 to The Agreement between the EFTA States on the Establishment of a Surveillance Authority (EEA Agreement). This Article contains similar safeguards and provides that:

(2) If movements of capital lead to disturbances in the functioning of the capital market in any EC Member State or EFTA State, the Contracting Party concerned may take protective measures in the field of capital movements. ... (4) Where an EC Member State or an EFTA State is in difficulties, …as regards its balance of payments … the Contracting Party concerned may take protective measures"

The EFTA Court held[36] that given the circumstances (Iceland sought to stabilize the króna and the foreign exchange reserves) the controls were compatible with the above provisions.

5.4 GATS

Under The General Agreement on Trade in Services (GATS) WTO members must open their capital account with regard to a covered service (as capital transactions are associated with financial service). Under mode 1 - a service provided from one country to another - they must allow inward and outward movements of capital and under mode 3 - commercial presence in the other country - the host country must allow inward capital movements. However, Article XII allows "Restrictions to Safeguard the Balance-of-Payment" under the following limitations " (a) shall not discriminate..; (b) shall be consistent with the Articles of Agreement of the International Monetary Fund; (c) shall avoid unnecessary damage ..; (d) shall not exceed those necessary to deal with the circumstances ..; (e) shall be temporary ...".

Therefore, there is ambiguity regarding the possibility of imposing effective capital controls under these restrictions, in particular in view of the "necessary" and "temporary" requirements. In addition to the balance and payments safeguard, Article 2(a) of the Annex on financial services[37] provides "prudential carve-out" as follows: "...a Member shall not be prevented from taking measures for prudential reasons, including for the protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owed by a financial service supplier, or to ensure the integrity and stability of the financial system. Where such measures do not conform with the provisions of the Agreement, they shall not be used as a means of avoiding the Member's commitments or obligations under the Agreement". Again, ambiguity regarding the end of the section, and it is not clear whether it can be regarded as a self-cancellation. However, in Argentina – Financial Services (2016) - which dealt with the circumstances of restricting access to Argentina's stock and insurance market (in the context of tax avoidance cooperation) - the Appellate Body[38] held, with regard to the above last sentence in the prudential carve-out, that "The reference to 'the provisions of the Agreement' suggests that this sentence also relates to inconsistencies with any other provision of the GATS" – that is that prudential reasons allow for deviations from any commitment in the agreement, including "for example, a Member's most-favoured-nation treatment obligation under Article II, market access commitments under Article XVI, or national treatment obligation under Article XVII". The Appellate Body also discussed the meaning of the term "for prudential reasons" and held that the requirement of necessity and temporality in Article XII does not apply to Article 2(a) of the Annex.

Bilateral trade (FTAs) and investment agreements (BITS)

Many countries are parties to trade and investment agreements, which often include a commitment to greater liberalization than the above-mentioned multilateral agreements - whether due to more extensive types of payments and transactions covered by these agreements, or due to more restricted carve-out and safeguards. In addition, many of the agreements include a mechanism of investor-state dispute settlement (ISDS) which allows foreign investors to force arbitration proceedings on the state that imposed capital controls.

For example, in El Paso Energy International Company v. Argentine[39] an American company claimed that Argentina's capital controls during the economic crisis, including taxation on outflows, contravene the investment treaty with the US and constitute expropriation of its property. The Tribunal ruled in its favor. The Belgium and Luxembourg-Malaysia BIT was also the subject of investor's claim (Gruslin v. Malaysia[40]) against Malaysia due to the exchange controls measures taken by it during the economic crisis (which he claimed caused him losses on the stock exchange).

In a recent G-24 working paper Gallagher et al[41] offer to map the various treaties in the international arena according to the level of flexibility in which they allow the use of Capital Controls. They find that art differs in several key parameters among them: the commitment to liberalize current and capital transfers and its scope, the existence of safeguards against balance of payments crises, the limitation of the scope of a “prudential measures” and ISDS procedure.

In addition, they mention that most of the new treaties include a most-favored-nation clause (MFN) that obligates a party to extend its best treatment of other partners to other treaties, to each other as long as it relates to a matter covered by the treaty. Therefore, and despite the above decision in Argentina – Financial Services case, this article may be interpreted as preventing restrictions on capital controls despite the provisions of specific treaty (but in any case will apply only if capital flows covered by the specific treaty and will not expand the possibility of ISDS[42]).

Their findings indicate that more new treaties are making it difficult to impose capital controls as a result of the stronger power of developed countries in negotiating agreements with developing countries.

5.5 U.S agreements

The US FTAs and BITs usually does not allow the use of capital controls, for example, Article 7 of the 2012 U.S. Model Bilateral Investment Treaty provides that: "Each Party shall permit all transfers relating to a covered investment to be made freely and without delay into and out of its territory" and Article 6 which deals with expropriation is used by American investors to force (in privet) countries into arbitration due to their use of Capital Controls. Article 20: Financial Services provide prudential curve-out but the term prudential is defined as "maintenance of the safety, .. of individual financial institutions, as well as the maintenance of the safety and financial and operational integrity of payment and clearing systems" and similar clauses in the trade and investment treaties signed were interpreted as not allowing the imposition of capital controls. Although in some treaties there is an appendix that allows the stay of the investor's claim, but this does not detract from the deterrence of the countries to use Capital Controls. Therefore, scholars[43] have criticized this position, inter alia, for requiring discrimination between American investors and other investors, and sometimes even against the IMF's Articles to the extent that a certain country is required by the IMF to use capital controls.

5.6 New Mega Trade Agreements

Trade and investment agreements with the European Union[44]

EU countries are leading exporters of financial services and therefore have an interest in including these services in the trade agreements and in liberalizing the capital flows associated with them. Finance Watch[45] report illustrates how the EU is pushing for liberalization of the new trade agreements at the expense of Capital Controls. For example, the integration of financial services in the proposed Trade in Services Agreement (TISA) and the "regulatory cooperation" and transparency provisions may prevent countries from applying capital controls. The EU proposed limiting the prudential curve out so that: “measures shall not be more burdensome than necessary to achieve their aim”. A similar "necessity" limitation was raised during the negotiations on Japan-EU Free Trade Agreement (JEFTA) but was rejected by the Japanese. The JEFTA uses the method of negative lists which requires total liberalization, with the exception of services explicitly mentioned. This is problematic in terms of restricting new and innovative financial services. A similar method was taken in the Comprehensive Economic and Trade Agreement - EU/Canada (CETA) and in this agreement there is also another problem- the ISDS mechanism which exposes the countries to arbitration proceedings and thus creates uncertainty and makes it difficult for Capital Controls. The obligation to review the regulation before approval of the proceedings is not expected to be helpful in situations of disagreement among the regulators (article 13.20 and 21). The report points out that in CETA the controls safeguard (article 28.4) is broader than the existing provisions in other agreements and allows for measures in case of “cause or threaten to cause serious difficulties for the operation of the economic and monetary union of the European Union.”

USMCA and TPP[46]

These agreements are in line with the liberalization trend in the above-mentioned trade agreements, but also include "Exchange Rate Matters" clause (in Chapter 33 of the USMCA) identical to Article IV of the IMF. Although this clause is intended to prevent the devaluation of the local currency - usually the opposite of what is caused by Capital Control - some believe that it may harm the use of capital controls due to the possible sanctions[47].

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[1] Yilmaz Akyuz (2015), “Foreign Direct Investment, Investment Agreements and Economic Development: Myths and Realities”, South Centre Research Paper #63, page 1. Available on: https://www.southcentre.int/research-paper-63-october-2015/#more-7895.

[2] Furceri, Davide & Loungani, Prakash. (2017), "The distributional effects of capital account liberalization". Journal of Development Economics. 130

[3] See Yan, Cheng, Hot Money in Disaggregated Capital Flows (November 27, 2017). European Journal of Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3077936

[4] John B. Taylor Capital Flows, the IMF's Institutional View, and An Alternative Remarks

at the Policy Conference “Currencies, Capital, and Central Bank Balances” Hoover Institution

Stanford University May 4, 2018

[5] Lynch, David J. "Bernanke's 'Cheap Money' Stimulus Spurs Corporate Investment Outside U.S". (17 November 2010). Bloomberg.

[6] Blanchard, Olivier J., Currency Wars, Coordination, and Capital Controls (July 2016). Peterson Institute for International Economics Working Paper No. 16-9. Available at SSRN: https://ssrn.com/abstract=2808693 or http://dx.doi.org/10.2139/ssrn.2808693

[7] Mishra, Prachi and Raghuram Rajan (2018), “Rules of the Monetary Game” paper presented at the Policy Conference “Currencies, Capital, and Central Bank Balances,” Hoover Institution, Stanford University

[8] Pistor, Katharina, From Territorial to Monetary Sovereignty (August 14, 2018). Theoretical Inquiries in Law, Vol. 18, Iss. 2, pp. 491 to 517, July 2017; Columbia Law and Economics Working Paper No. 591. Available at SSRN: https://ssrn.com/abstract=3251397 or http://dx.doi.org/10.2139/ssrn.3251397

[9] Corfu Channel, United Kingdom v Albania, Judgment, Merits, ICJ GL No 1, [1949] ICJ Rep 4, ICGJ 199 (ICJ 1949), 9th April 1949, United Nations [UN]; International Court of Justice [ICJ]

[10] See for example D. Rodrik, Rescuing Economics from Neoliberalism, Boston Review, November 6, 2017< http://bostonreview.net/class-inequality/dani-rodrik-rescuing-economics-neoliberalism>

[11] See in Ostry, J., Loungani, P., & Furceri, D. (2016). Neoliberalism: Oversold?, IMF Finance and Development, Vol. 53, No. 2

[12] See 4 above.

[13] Did the Malaysian Capital Controls Work?, Ethan Kaplan, Dani Rodrik. in Preventing Currency Crises in Emerging Markets, Edwards and Frankel. 2002

[14] Senator Marco Rubio, “S.2, 116th Congress (2019-2020): Fair Trade with China Enforcement Act,"

Congress.gov,January 3, 2019, https://www.congress.gov/bill/116th-congress/senate-bill/2. "to make more expensive China’s currency intervention, in addition to reducing extranormal upward pressure on the USD due to China-source investment, which as discussed in this report, is often not market-based".

[15] Baldursson, Fridrik M. and Portes, Richard and Thorlaksson, Eirikur Elis, Iceland's Capital Controls and the Resolution of its Problematic Bank Legacy (July 3, 2017). Available at SSRN: https://ssrn.com/abstract=2996631 or http://dx.doi.org/10.2139/ssrn.2996631

[16]Stiglitz, Joseph E., 2003. "Globalization and growth in emerging markets and the New Economy," Journal of Policy Modeling, Elsevier, vol. 25(5), pages 505-524, July.

[17] Valerio Nispi Landi, 2018. "Capital controls spillovers," Temi di discussione (Economic working papers) 1184, Bank of Italy, Economic Research and International Relations Area.

[18] Sam Merdith ‘Full-blown’ capital controls in Turkey could spark emerging market contagion, Goldman Sachs analyst says" (AUG 2018) CNBC < https://www.cnbc.com/2018/08/16/turkey-lira-crisis-goldman-sachs-warns-emerging-market-contagion-could-follow-capital-controls.html>

[19] Gourio, Francois and Siemer, Michael and Verdelhan, Adrien, Uncertainty and International Capital Flows (August 28, 2015). Available at SSRN: https://ssrn.com/abstract=2626635 or http://dx.doi.org/10.2139/ssrn.2626635

[20] Axel Dreher & Lars-H. Siemers, 2009. "The nexus between corruption and capital account restrictions," Public Choice, Springer, vol. 140(1), pages 245-265, July.Vol. 140, No. 1/2 (Jul., 2009), pp. 245-265

[21] See Taylor 4 above.

[22] See Dani Rodrik's weblog, Nonsensical arguments against capital controls (2008) at: <https://rodrik.typepad.com/dani_rodriks_weblog/2008/03/nonsensical-arg.html>

[23] Duncan E. Williams, Policy Perspectives on the Use of Capital Controls in Emerging Market Nations: Lessons from the Asian Financial Crisis and a Look at the International Legal Regime, 70 Fordham L. Rev. 561 (2001).

[24] Kevin P. Gallagher Ruling Capital: Emerging Markets and the Reregulation of Cross-border Finance

Cornell University Press (2015)

[25] International Monetary Fund, The Liberalization and Management of Capital Flows: An Institutional View, Policy Survey Paper International Monetary Fund (2012)

[26] Magalhães Prates, Daniela & Farhi, Maryse. (2015). From IMF to the Troika: new analytical framework, same conditionalities. Économie et Institutions.

[27] Articles of Agreement of the International Monetary Fund at<https://www.imf.org/external/pubs/ft/aa/index.htm>

[28] See Duncan E. Williams 23 above.

[29] See Mishra, Prachi and Raghuram Rajan above.

[30] Global Governance of Financial Systems. The International Regulation of Systemic Risk By Alexander Kern, Dhumale Rahul, and Eatwell John [OUPOxford New York2006320 pp ISBN 9780195166989 £26.99 (h/bk)]

[31] See, e.g., Banco Do Brasil, S.A. v. A.C. Israel Commodity Co. Inc., 190 N.E.2d

235 (N.Y. 1963) (endorsing a narrow view of an exchange contract); J. Zeevi & Sons,

Ltd. v. Grindlays Bank (Uganda), Ltd., 333 N.E.2d 168 (N.Y. 1975) (letter of credit is

not an exchange contract).

[32] OECD (2018), OECD Code of Liberalisation of Capital Movements, 2018< https://www.oecd.org/daf/inv/investment-policy/Code-capital-movements-EN.pdf>

[33] OECD (2015), OECD Code of Liberalization of Current Invisible Operations < https://www.oecd.org/daf/fin/private-pensions/InvisibleOperations_WebEnglish.pdf>

[34] OECD (2015), OECD PROMOTING ORDERLY CAPITAL FLOWS: THE APPROACH OF THE CODE <http://www.oecd.org/daf/inv/investment-policy/CapMovCodeBrochure.pdf

[35] “Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union,” European Commission < http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12016ME/TXT&from=EN>

[36] Case E-3/11 Sigmarsson v. The Central Bank of Iceland, Judgment of the EFTA Court of 14 December 2011, [2012] 1 CMLR 50.

[37] See WTO analytical index GATS – Annex on Financial Services (Jurisprudence) <https://www.wto.org/english/res_e/publications_e/ai17_e/gats_annfinancialservices_jur.pdf>

[38] Appellate Body Report, Argentina – Measures Relating to Trade in Goods and Services, WT/DS453/AB/R and Add.1, adopted 9 May 2016, DSR 2016:II, p. 431

[39] El Paso Energy International Company v The Argentine Republic - ICSID Case No. ARB/03/15 -Decision on the Application for Annulment (22 September 2014)

[40] Philippe Gruslin v. Malaysia (Case No. ARB/94/1) 13 January 1994

[41] Kevin P. Gallagher, Sarah Sklar, Rachel Thrasher Quantifying the Policy Space for Regulating Capital

Flows in Trade and Investment Treaties A G-24 Working Paper April 2019

[42] See Gallagher et al refer to ADF Group Inc. v. United States of America, ICSID Case No. ARB (AF)/00/1

[43] See Gallagher et al

[44] With regard to agreements within the EU, it should be noted that following the Slovak Republic v. Achmea B.V., Case no. C-284/16 judgment all EU countries undertook to abolish their BITs with other EU c members

[45] Financial Regulation challenged by European Trade Policy, a report by Veblen Institute for Economic Reforms and Finance Watch (October 2018)

[46] United States–Mexico–Canada Agreement (signed) and the proposed rans-Pacific Partnership (TPP)

[47] See Neal Kimberley, On China’s ‘currency manipulation’, the US should be careful what it wishes for, South China Morning Post (October 2018) at <https://www.scmp.com/comment/insight-opinion/united-states/article/2168660/chinas-currency-manipulation-us-should-be>