Developing countries are not stopped from controlling their short-term capital flows. But international approval of such measures would help countries planning to introduce these moves. So far, such an approval has not been forthcoming. The difference between the two is in how the shocks work themselves out. Akyuz added that the issue is that the choice of exchange rate regime should not be part of IMF conditionality and countries should choose their own system.
Countries facing crisis have three problems relating to international liquidity provision.
Facilities may be introduced but they lack funds. Thus, the IMF draws on its major shareholders, opening the road to undue political influence. Thirdly, the funds go not to the countries but to bail out creditors. The funds should ideally be used to support the country s currency level against speculation, but typically, the currency is instead allowed to collapse and the funds go to bail out the creditors. He said in such a system, a debtor s rights included a temporary standstill on payments, continued financing, and debt restructuring.