Increasingly many EMEs are beginning to impose capital controls and regulations, both of the traditional kind such as reserve requirements, URR and restrictions on investment in debt including minimum investment period but also more innovative ones such as prudential measures, administrative measures, tax measures and quantitative limits, particularly targeting the derivative positions held by banks.
Indeed, many of these derivatives were initially invented to avoid precisely regulations on capital inflows or other types of financial activity. The key elements of this shift have been the following:   1  2  Ex-ante management of capital flows is now accepted as a legitimate instrument of macroeconomic policy and financial stability.