Finally, the IMF notes that its new view on capital flow management may be at odds with other international commitments, such as in trade and investment treaties that restrict the ability to regulate cross-border finance. The World Bank has also advocated the use of capital control measures as a last resort to help mitigate a financial crisis and stabilise macroeconomic developments. 11.
If inflation is allowed to gather pace, the process of reining back excess demand, through higher interest rates, is inevitably more wasteful, in terms of an extended period of growth below capacity, than if timely action is taken by the monetary authorities to keep the pace of demand in line with the supply capacity of the economy.