2.5 Hipótesis
2.3.1 Planteamiento de la Hipótesis
i.
Indirect Capital Controls
Capital Control and Domestic Interest Rates: A generalized Model supra .
supra . supra .
supra supra .
Capital Controls: Country Experiences with Their Use and Liberalization Country Experience
Country Experiencesupra supra .
supra . . Country Experience supra
Ariyoshi, Country Experiencesupra supra . Cf. supra supra .
different tax rates on foreign transactions or impose different exchange rates according to the type of transaction in order to encourage or discourage specific transactions.2 1 2
Many indirect controls are hardly distinguishable from prudential measures. An example of such indirect controls is the restrictions imposed on private persons from taking foreign loans except after having a minimum credit rating.2 1 3 Other examples of indirect controls are “provisions for commercial bank’s net balance in foreign currency, limitations on unpaid foreign currency option contracts ‘that discrim inates between long and short currency positions or between residents and non-residents . . ..’”2 1 4 These can be considered prudential measures as well.
Another market-based capital control is a particular form indirect taxation. In this case, the
central bank or an equivalent authority imposes “a non-remunerated reserve requirement on
banks and companies on obligations denominated in foreign currency.”2 1 5
An example of an unremunerated reserve requirement (URR) is the URR used by Colombia and Chile to combat short-term capital inflows.2 1 6 The Chilean URR was imposed in June 1991 until September 1998.2 1 7 The URR directs foreign lenders to Chilean private persons to deposit an amount equal to a certain percentage of their loan in a non-interest generating account at the Chilean Central Bank for a certain time period.2 1 8 At first, the time period for the deposit was between ninety days to one year depending on the maturity of the investment.2 1 9 This was amended in 1992 to one year without regardto the maturity of investment.2 2 0 The URR scope changed over time to cover more investment, except for what was conceived as “nonspeculative foreign direct investment”.2 2 1
212 Williams, n 200, at 573. 213 . at 574. 214 . at 573 (footnote omitted). 215McKnight, n 153, at 885. 216 Jones, n 86, at 87. 217
Michael K. Ulan, , 579 Annals 249 , 253 (2002).
218 219
. 220 221
(Colombia also applied URR. However, Colombia was not successful like Chile).
supra .
Id Id
supra .
supra .
Should Developing Countries Restrict Capital Inflows? Id.
Id Id. Id.
Direct or administrative controls refer to a governmental direct interference in its regulatory capacity with the clear intent of directing capital flows.2 2 2 These are straightforward controls. They are done through banning or restricting capital movements or underlying capital
transactions. These controls encompass restrictions on certain transactions or a requirement of prior approval on certain transactions.2 2 3
Administrative controls are usually intended to directly shape the volume of capital flows. They oblige banks to control such flows.2 2 4
“
Theusual methods of ….direct controls are prohibitions, quantitative lim its (quotas), rule-based or discretionary approval, and minimum-stayrequirements for direct and portfolio investment.”2 2 5
These may be a complete ban of certain transfers, a requirement of authorization by the appropriate authorities for each transaction, orprescribing certain amount of foreign liability and/or credit that can be undertaken by banks and other private persons whether as borrowers or
lenders.2 2 6
Administrative controls can take many forms, including (i) restricting capital access totally or from certain sectors; (ii) screening to decide to permit or reject it and may put some conditions to permit the access of the foreign investment (e.g. performance requirements)2 2 7; (iii) limiting foreign ownership; (iv) imposing maximum percentage of shareholding in corporations; (v) restricting the amount of obligations owed to foreigners.2 2 8; and (vi) requiring registration.2 2 9 An example of prior approval requirement to control capital and minim ize speculation is the Taiwanese Qualified Foreign Institutional Investors.2 3 0 It restricts the ability of foreigners to
222Ariyoshi n. 207, at 7. 223 Williams, n 200, at 572. 224 Ariyoshi, , n. 207, at 7. 225 Williams, n 200, at 572. 226 Gold, n. 1, at 4; Ariyoshi, , n. 207, at 7. 227 Muchlinski, , at 63. 228 McKnight, n 153, at 889.
229UNCTAD, in UNCTAD Series on issues in
international Investment Agreements, UNCTAD/ITE/IIT/13, at 63 (1999).
230
Williams, n 200, at 573.
ii.
Direct or Administrative Capital Controls
, Country Experiencesupra
supra .
Country Experience supra supra .
supra Country Experience supra supra n.
supra .
Trends in International Investment Agreements: An Overview supra .
deal in the Taiwanese stock exchange except those authorised by the Taiwanese security market regulatory agency.2 3 1
Exchange controls are frequently used to ensure enforcement of capital controls.2 3 2It is difficult to define exchange controls. A suggested definition offers that exchange controls are tools of monetary policy that restrict the ability to pay or transfer funds to non-residents. 2 3 3 Classic exchange controls entail designating a national institution to exclusively regulate all foreign exchange allocation and operations.2 3 4Originally, they were used to restrict capital outflows. 2 3 5
Exchange controls are employedto preserve the country’s balance of payment by restricting the demand on foreign exchange, to protect and stabilize the country’s monetary resources, and to allocate foreign exchange to achieve maximum benefit. 2 3 6
A method of enforcing exchange controls is to register all capital inflows upon its entry.2 3 7 This way, repatriation of returns and original capital is permitted on the basis of the value recorded in this registration.2 3 8 Exchange controls may involve lim iting the ability to convert the national
currency into foreign currencies.2 3 9
According to the IMF Articles, member countries may not enforce exchange contracts that are concluded in breach of exchange control regulations of another member country, which are related to the latter’s currency.2 4 0 However, discrim inatory and undue exchange controls are
231
. 232
Richard W. Edwards, , at 450 (Transnational Publishers, Inc., 1985); . Jomo , n 204, at 24.(maintaining that exchange controls can be kind of capital controls and may be used to ensure its enforcement. But this is not always the case; exchange controls may be used for restricting current account for balance of payment purposes).
233
Charles Proctor, , at 225 (Butterworths, 1997).
234A.A. Fatouros, , at 47. 235 . 236 .; Proctor, n 233, at 225. 237Jeswald W. Salacuse, , JOINT VENTU RING ABRO AD: ACASE STUD Y, at 118 (ed., David N. Goldsweig, ABA, 1985).
238 . 239
Hans Visser, , International Economic Law with a Human Face, at 537 (ed. Friedl Weiss, Erik Denters & Paul de Waart, Kluwer Law International, 1998).
240
, adopted July 22, 1944, (entered into force Dec. 27, 1945).
iii. Exchange Controls
Id
International Monetary Collaboration Cf
supra .
International Payment Obligations: A Legal Perspective Government Guarantees to Foreign Investors
Id
Id supra .
Host Country Regulation of Joint Ventures and Foreign Investment Codes in
Id
Exchange Rates and Development in
denied effect in some national courts. English courts, for example, will not take into account foreign exchange controls that are imposed “in a discrim inatory or oppressive manner”.2 4 1
A multiple exchange rate system mainly offers certain transactions a better exchange rate than it
offers to others.2 4 2 Dual and multiple exchange rate systems seek to increase the cost of
transactions on speculative transactions especially to avoid short-term inflows with high interest rates which the government perceives as overburdening residents.2 4 3 Dual and multiple
exchange rate systems satisfy the demand of non-speculators for credit under normal exchange
rates, while giving a higher exchange rate to such speculators.2 4 4 This requires imposing and monitoring foreign exchange transactions of residents and dealings of national currency by non- residents to distinguish between capital and current transactions.2 4 5 This is done through
directing financial institutions not to lend to such speculators while allowing lending and foreign exchange transactions to foreign direct investment and trade activities.2 4 6
There are many reasons posited for using capital controls. In addition to the abovementioned concerns regarding liberalizations of international capital movements, there are additional reasons to impose capital controls. Foreign investment and capital flows may cause macro economic and balance of payments problems.2 4 7 There are many risks that arise from lifting all capital controls in an inefficient capital market. In a developing country where the banking system is not developed enough, the country may not be able to effectively utilise the inflows to its most efficient use.2 4 8 If the economy cannot utilize capital inflows efficiently, the market will expect the ability of the economy to repay its external debt and sustain capital inflows.2 4 9
The inexistence of efficient regulatory system and financial markets that can deal with such
flows, especially in developing countries, is an obstacle for the efficient use of international
241 Proctor, n 233, at 237. 242 Fatouros, n. 234, at 47; Salacuse, n 237,at 119. 243 Ariyoshi, , n. 207, at 7. 244 . 245 . 246 . 247
R. Barry Johnston & Natalia T. Tamirisa, , at 13 (IMF Working paper WP98/181, 1998).
248
McKnight, n 153, at 878.
249
Johnston, n 117.