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Emerging Markets Bristle at Capital Control Limits

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Developing countries on Saturday pushed back hard against attempts to restrict how they manage money pouring into their fast-growing economies and said rich nations should reconsider their own policies instead.

Resistance to limiting capital controls, a sensitive topic for economies inundated with inflows of inflationary "hot money" from countries with low interest rates such as the United States, was widespread among emerging market finance leaders at a weekend International Monetary Fund meeting here.

"We oppose any guidelines, frameworks or 'codes of conduct' that attempt to constrain, directly or indirectly, policy responses of countries facing surges in volatile capital inflows," said Brazilian Finance Minister Guido Mantega.

The IMF this month endorsed use of capital controls, a tool once considered anathema to its free-market philosophy, but advanced countries want to establish a framework to monitor the policies governments use, an approach emerging markets oppose.

"Ironically, some of the countries that are responsible for the deepest crisis since the Great Depression and have yet to solve their own problems are eager to prescribe codes of conduct to the rest of the world," Mantega said, "including to countries that are overburdened by the spillover effects of the policies adopted by them."

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You have to admit they make a valid point. I too would have a hard time swallowing financial advice from someone who's trillions of dollars in the hole