Capital Flows: Good Or Bad?

An invitation from Andrew Hilton, director, CSFI

The pros and cons of capital controls: A round-table discussion on new thinking about capital flows. With Peter Chowla (Bretton Woods Project), Glenn Hoggarth (Bank of England) and Anne Richards (Aberdeen Asset Management).

To be held on Thursday, March 29, 2012 from 12:30-2:15pm.

At Innholders' Hall, 30 College St, London, EC4R 2RH.

 “Whatever we financial liberals might want to believe, there is a growing consensus in a very large part of the world that free cross-border capital movements are not necessarily a Good Thing. Indeed, post-crisis, the new orthodoxy in Asia and Latin America is that deregulation of capital flows can have potentially devastating consequences, contributing to financial/banking instability, income inequality und so weiter.

“To some extent, this is the old left-right ideological debate on development, in which the only losers are the poor souls who actually live in the countries concerned. But we now have a globalised economy, and what happens in Asia or Latin America (or, increasingly, in Africa) may well be absolutely crucial to pension fund investors in Sunderland or Sydenham. The West looks like a pretty rotten long-term punt in terms of growth (and demographics); if we are going to fund our own (and our children's) old age, it is probably only going to be

because we have some kind of stake in the economic future of the high-growth emerging economies. So the policy decisions they take can have a very direct impact on our own well-being.

“In the forefront of the new thinking about capital flows is the Bretton Woods Project - a fairly loosely structured quasi-think tank that was originally set up to challenge the Washington Consensus (as represented by the World Bank and the IMF). It has recently published two significant reports on the subject (the titles of which suggest where its heart lies):

- "Breaking the mould: How Latin America is coping with volatile capital flows"; and

- "Time for a new consensus: Regulating financial flows for stability and development".

“Lead author on one and director at the BWP is Peter Chowla. We are delighted that he has agreed to summarise current thinking on capital flows. However, he won't have things all his own way. We are also delighted that two respondents - one from the finance industry and one from the central bank community - have agreed to set him straight:

- Anne Richards is chief investment officer for Aberdeen Asset Management, and a main board director; and

- Glen Hoggarth is a senior economist in the international finance division at the BofE, where he leads on G20 and IMF issues.

“These are important markets and important issues. If you (or a colleague) would like to join us for what will be a stimulating discussion, would you please let us know by emailing [email protected] or by calling the office on 020 7493 0173. As usual, wine and sandwiches will be provided.”

Sincerely yours,

Andrew Hilton

Director

CSFI