I

Memorandum

II

List of Organisations with whom the Committee had discussions or received material as also a list of persons who provided help to the Committee

III.1

IMF Members not having Restrictions on Payments for Capital Transactions

III.2

Capital Controls in Developing Countries

III.3

Comparator Country Performance

III.4

Reserve Adequacy Indicators

III.5

Indicators of the Structure of Banking Industry

III.6

Indicators of Profitability and Concentration in the Banking Industry

III.7

Loan Loss Reserves and Non-Performing Loans

III.8

Argentina: Summary of the Regulations on Capital Account and other Financial Transactions

III.9

A.

Korea: Sequencing of Capital Account Transactions

B.

Korea: Sequencing of Foreign Exchange Market Reforms

Annexure I

Reserve Bank of India

Central Office

Mumbai 400 001

Memorandum

1.

With a view to examining the various issues relating to capital account

convertibility, Reserve Bank of India appoints a Committee on Capital Account Convertibility.

2.

The Committee consists of the following :

1)

Shri S.S.Tarapore

Chairman

2)

Dr. Surjit S.Bhalla

Member

3)

Shri M.G.Bhide

Member

4)

Dr. Kirit Parikh

Member

5)

Shri A.V.Rajwade

Member

3.

The terms of reference of the Committee will be as follows :

(i)

To review the international experience in relation to capital account convertibility and to indicate the preconditions for introduction of full capital account convertibility.

(ii)

To recommend the measures that should be taken to achieve full capital account convertibility.

(iii)

To specify the sequence and time frame in which such measures are to be taken.

(iv)

To suggest domestic policy measures and changes in institutional framework, consistent with the specified sequencing, and

(v)

To make such other recommendations as the Committee may deem relevant to the subject.

4.

The Committee will adopt its own work procedures and meet as often as necessary.

The Committee is expected to submit its Report by May 30, 1997.

6.

The Secretariat for the Committee will be provided by the Reserve Bank of India.

(C.Rangarajan)

Governor

28.2.1997

Annexure II

List of Organisations with whom the Committee had discussions or received material as also a list of persons who provided help to the Committee:

List of Organisations

1.

Associated Chambers of Commerce and Industry of India ( ASSOCHAM)

2.

Confederation of Indian Industry (CII)

3.

Federation of Indian Chambers of Commerce and Industry (FICCI)

4.

PHD Chamber of Commerce and Industry

5.

Indian Merchants' Chamber

6.

Federation of Indian Export Organisations (FIEO).

7.

Indian Banks Association (IBA)

8.

Foreign Exchange Dealers' Association of India (FEDAI).

9.

Bombay Chartered Accountants' Society

10.

Bombay Chamber of Commerce and Industry

11.

Industrial Development Bank of India (IDBI)

12.

Industrial Credit and Investment Corporation (ICICI)

13.

Export- Import Bank of India (EXIM Bank)

14.

Bank Indonesia

15.

Bank of Thailand

16.

Banco Central de Chile

17.

Ministry of Finance, Buenos Aires, Argentina

18.

Bank of Mexico

19.

Bank Negara, Malaysia

20.

Bank of Korea

21.

Reserve Bank of New Zealand

22.

Central Bank of the Philippines

23.

South African Reserve Bank

List of Persons:

1.

M.R.Sivaraman, Executive Director, International Monetary Fund.

2.

R. Kannan, International Monetary Fund

3.

David Goldsbrough, International Monetary Fund

4.

Suman Bery, The World Bank

5.

John Williamson, The World Bank

6.

N. Ganesh Kumar, University of Southern California, Los Angeles.

7.

G.Giridhar Prabhu, Achal Industries

8.

M.V Subbiah, Murugappa Group

9.

Ajay Shah, Indira Gandhi Institute of Developmental Research

10

Susan Thomas, Indira Gandhi Institute of Developmental Research

Reserve Bank of India

1.

V Subrahmanyam, Executive Director

2.

A. Vasudevan, Executive Director

3.

C. Harikumar, Executive Director

4.

Khizer Ahmed

5.

A. K. Batra

6.

B. Maheshwaran

7.

Benu Schneider

8.

Urjit Patel

List of Persons:

Department of External Investments and Operations

9.

H. Bhattacharya

10.

G. Mahalingam

11.

Raj i v Ranjan

12.

Vanitha K Venugopal

13.

R. Mani

14.

R. Srinivas Rao

15.

G. V. Naik

16.

J. S. Jathan

17.

R.S. Vaidya

Department of Economic Analysis & Policy

18.

S.K. Pattanaik.

19.

L. Laxmanan

20.

David L. Sinate

21.

Sumit B asu

22.

S. Sugandhi

23.

Ambika Padmanabhan

24.

L.F..Fernandes

Exchange Control Department

25.

K. G. Chaudhari

26.

K.C.Nair

27.

K. Ramasubramanian

28.

K.K. Rawal

29.

G. Padmanabhan

30.

F.M. Chinikamwala

31.

D.G. Kolhatkar

Annexure III.1

IMF Members not having

Restriction on Payments for

Capital Ttansactions

Developed countries

1.

Australia

2.

Austria

3.

Belgium and Luxembourg

4.

Canada

5.

Denmark

6.

Finland

7.

France

8.

Germany

9.

Hong Kong

10.

Ireland

11.

Italy

12.

Netherland

13.

New Zealand

14.

Norway

15.

Portugal

16.

Saudi Arabia

17.

Spain

18.

Sweden

19.

Switzerland

20.

United Kingdom

21.

United States

Developing Countries

1.

Antigua and Barbuda

2.

Argentina

3.

Bahrain

4.

Bolivia

5.

Brunei Darussalam

6.

Costa Rica

7.

Djibouti

8.

Ecuador

9.

El Salvador

10.

Estonia

11.

Gambia

12.

Guatemala

13.

Honduras

14.

Indonesia

15.

Jamaica

16.

Kiribati

17.

Kuwait

18.

Latvia

19.

Lebanon

20.

Lithuania

21.

Malaysia

22.

Maldives

23.

Marshall Island

24.

Mauritius

25.

Micronesia,Fed. States of

26.

Niger

27.

Oman

28.

Panama

29.

Peru

30.

Qatar

31.

San Marino

32.

Seychelles

33.

Singapore

34.

Trinidad And Tobago

35.

United Arab Emirates

36.

Vanuatu

Source

:

International Monetary Fund

Annexure III.2

Capital Controls in Developing Countries

Category

Number of Countries Maintaining Controls

Any form of capital control

119

Comprehensive controls

67

On outflows

67

On inflows

17

Foreign direct investments

107

Of non residents

84

Of residents

35

Profit repatriation and capital liquidation

34

Taxes on capital transactions

9

Non resident-controlled enterprises

6

Portfolio investments

61

Of non residents

30

Of residents

33

Security issuance by non residents

15

Security issuance abroad by residents

6

Debt-to-equity conversion

2

Financial transactions

78

Of non residents

41

Of residents

66

Trade-related financial transactions

7

Deposit requirements for borrowing

from abroad by residents

2

Deposit accounts

83

Of non residents in foreign exchange'

37

Of non residents in local currency

52

Of residents abroad

29

Of residents in foreign currency with

23

domestic banks

Other capital transfers

70

Personal capital transfers

34

Blocked accounts

24

Real estate transactions

Of non residents

23

Of residents

30

Source: Quirk, Peter J., Owen Evans, et al " Capital Account Convertibility, Review of Experience and Implications for IMF. Policies", Occasional Paper 13 1, IMF, Washington D.C. , October 1995.

Annexure III.3

Comparator Country Performance

Real GDP Growth (per cent)

1990

1991

1992

1993

1994

1995

Argentina

0.1

8.9

8.7

6.0

7.4

-4.6

Chile

3.3

7.3

10.7

6.6

4.2

8.5

Indonesia

7.2

7.0

6.5

6.5

7.5

8.1

Korea

9.5

9.1

5.1

5.8

8.6

9.0

Malaysia

9.7

8.7

7.8

8.3

8.7

9.5

Mexico

4.5

3.6

2.8

0.7

3.5

-6.9

New Zealand

-0.8

-1.3

Neg

6.0

3.4

6.2

Philippines

3.0

-0.5

0.3

2.1

4.4

4.8

Thailand

11.6

8.4

7.9

8.2

8.5

15.4

South Africa

-0.3

-1.0

-2.2

1.3

2.7

3.3

India

5.7

0.5

4.6

4.5

6.3

7.2

Neg

:

Negligible.

Investment/GDP (Per cent)

1990

1991

1992

1993

1994

1995

Argentina

14.0

14.6

16.7

18.2

19.9

18.3

Chile

26.3

24.5

26.8

28.8

26.8

27.4

Indonesia

36.1

35.5

35.9

33.2

34.3

41.8

Korea

36.9

38.9

36.6

35.1

36.1

37.1

Malaysia

31.3

35.9

33.5

35.0

38.5

40.7

Mexico

22.8

23.4

24.4

23.2

23.5

19.4

New Zealand

19.9

16.8

18.6

21.1

22.3

21.9

Philippines

24.2

20.2

21.3

24.0

24.0

22.3

Thailand

41.1

42.2

39.6

39.9

40.1

42.2

South Africa

17.6

16.9

15.9

15.7

17.7

19.3

India

27.7

23.4

24.0

23.6

26.0

27.4

Inflation, CPI (Percent)

1990

1991

1992

1993

1994

1995

Argentina

2314.0

171.7

24.9

10.6

4.2

3.4

Chil

26.0

21.8

15.4

12.7

11.4

8.2

Indonesia

7.8

9.4

7.5

9.7

8.5

9.4

Korea

8.6

9.3

6.2

4.8

6.3

4.5

Malaysia

2.6

4.4

4.8

3.5

3.7

5.3

Mexico

26.7

22.7

15.5

9.8

7.0

35.0

New Zealand

6.1

2.6

1.0

1.3

1.7

3.8

Philippines

14.1

18.7

8.9

7.6

9.1

8.1

Thailand

6.0

5.7

4.1

3.4

5.1

5.7

South Africa

14.4

15.3

13.9

9.7

9.0

8.7

India

9.0

13.9

11.8

6.4

10.2

10.2

CAD/GDP (Percent)

1990

1991

1992

1993

1994

1995

Argentina

3.2

-0.3

-2.9

-2.9

-3.3

-0.9

Chil

-1.8

0.3

- 1.6

-4.6

-1.2

0.2

Indonesia

-2.8

-3.7

-2.2

-1.3

-1.6

-3.4

Korea

-0.7

-2.8

-1.3

0.3

-1.0

-1.8

Malaysia

-2.0

-8.9

-3.7

-4.4

-5.9

-8.3

Mexico

-3.0

-5.1

-7.3

-6.4

-7.8

-0.3

New Zealand

-7.2

-3.5

-3.4

-2.5

-4.6

-6.3

Philippines

-6. 1

-2.3

-1.9

-5.5

-4.4

-2.7

Thailand

-8.5

-7.7

-5.7

-5.6

-5.9

-8.1.

South Africa

1.9

-2.0

1.2

1.5

-0.5

-2.6

India

-3.2

-0.4

-1.8

-0.4

-1.1

-1.6

Current Receipts/GDP (Per cent)

1990

1991

1992

1993

1994

1995

Argentina

265.6

8.9

7.4

6.9

7.8

10.2

Chile

35.8

34.7

31.2

27.8

29.4

30.3

Indonesia

28.4

28.8

30.1

26.8

26.7

31.3

Korea

31.1

29.5

30.2

30.2

31.3

34.3

Malaysia

81.2

84.3

80.5

84.9

93.6

97.4

@

Mexico

8.1

19.9

18.4

18.4

20.8

39.0

New Zealand

28.8

29.5

31.0

32.1

32.1

31.7

Philippines

31.0

38.7

34.3

36.1

39.1

45.9

Thailand

36.9

38.7

38.9

40.2

42.2

45.2

South Africa

26.5

24.9

23.8

24.5

24.6

25.2

India

8.7

11.1

11.1

12.5

13.3

14.8

@

Excludes Transfer Receipts

Reserves* ($ Bn.)

1990

1991

1992

1993

1994

1995

Argentina

4.6

6.0

10.0

13.8

14.3

14.3

Chile

6. 1

7.0

9.2

9.6

13.1

14.1

Indonesia

7.5

9.3

10.4

11.3

12.1

13.7

Korea

14.8

13.7

17.1

20.2

25.6

32.7

Malaysia

9.8

10.9

17.2

27.2

25.4

23.8

Mexico

9.9

17.7

18.9

25.1

6.3

16.8

New Zealand

4.1

3.0

3.1

3.3

3.7

4.4

Philippines

0.9

3.2

4.4

4.7

6.0

6.4

Thailand

13.3

17.5

20.4

24.5

29.3

36.0

South Africa

1.0

0.9

1.0

1.0

1.7

2.8

India

2.3

5.7

6.5

15.2

20.8

17.1

*Total Reserves minus Gold.

Reserves */Imports (Months)

1990

1991

1992

1993

1994

1995

Argentina

13.5

8.7

8.1

9.9

8.0

8.5

Chile

9.5

10.4

10.9

10.4

13.3

10.7

Indonesia

4.1

4.3

4.6

4.8

4.6

4.0

Korea

2.5

2.0

2.5

2.9

3.0

2.9

Malaysia

4.0

3.6

5.2

7.2

5.1

3.7

Mexico

3.8

5.6

4.7

6.1

1.2

4.4

New Zealand

5.2

4.2

4.0

4.2

3.8

3.8

Philippines

0.8

3.0

3.4

3.0

3.2

2.7

Thailand

4.8

5.6

6.0

6.4

6.5

5.9

South Africa

0.7

0.6

0.6

0.6

0.9

1.1

India

1.0

3.3

3.3

7.3

7.4

4.9

*Total Reserves minus Gold

Exchange Rates {App. (+)/Dep. (-)} (Period Average)

1990

1991

1992

1993

1994

1995

Argentina #

-1051.9

-95.6

-3.9

-0.8

-0.0

-0.1

Chile *

-14.2

- 14.5

-3.8

- 11.5

-3.9

5.5

Indonesia @

-4.1

-5.8

-4.1

-2.8

-3.5

-4.1

Korea @

-5.4

-3.6

-6.4

-2.8

-0.1

4.0

Malaysia #

0.1

-1.7

7.4

-1.0

-2.0

4.6

Mexico @

-14.3

-7.3

-2.6

-0.7

-8.3

-90.2

New Zealand @

0.6

2.7

7.1

-0.5

-9.8

-10.6

Philippines @

-11.8

-13.0

7.2

-6.3

2.6

2.7

Thailand #

0.5

0.3

0.5

0.3

0.7

0.9

South Africa *

-1.2

6.2

3.3

12.7

8.0

2.1

India @

-7.9

-29.9

-14.0

-17.7

-2.9

-3.4

#

Official Rate;

@

Market Rate;

*

Principal Rate;

Debt Service Ratio (Per cent)

1990

1991

1992

1993

1994

Argentina

41.1

36.4

32.3

36.8

31.8

Chile

26.4

23.2

21.0

23.1

19.2

Indonesia

31.5

34.0

31.6

33.8

30.0

Korea

10.7

7.1

7.6

9.2

6.8

Malaysia

10.3

7.7

6.6

7.8

7.7

Mexico

25.9

29.6

44.3

42.3

33.9

New Zealand#

NA

NA

NA

NA

NA

Philippines

27.0

23.0

24.4

25.5

18.5

Thailand

16.9

13.0

13.7

18.5

15.6

South Africa

10.7

9.5

15.3

.10.3

10.7

India

35.3

30.2

28.6

26.9

27.5

# Not included in World Debt Tables.

GFD/GDP (Per cent)

1990

1991

1992

1993

1994

1995

Argentina

-0.3

-0.5

-0.0

-0.6

-0.7

NA

Chile

0.8

1.5

2.2

1.9

1.6

2.5

Indonesia

0.4

0.4

-0.4

0.6

0.0

0.0

Korea

-0.7

- 1.6

-0.5

0.6

0.3

-0.2

Malaysia

-4.8

-4.4

-4.2

-5.3

2.4

0.9

Mexico

-2.8

-0.2

1.5

0.4

-0.8

-0.7

New Zealand

4.0

1.9

-2.2

0.1

0.8

0.1

Philippines

-3.5

-2.1

-1.2

-1.5

1.1

0.5

Thailand

4.5

4.7

2.8

2.1

1.9

3.0

South Africa

-2.5

-4.1

-7.9

-6.0

-5.7

-5.5

India@

-8.3

-5.9

-5.7

-7.4

-6.1

-5.5

@

Refers to Central Government Only.

N.A. : Not Available

Sources: World Debt Tables 1996.

International Financial Statistics Year Book 1996, IMF.

International Financial Statistics, February 1997, IMF.

Economic Survey, GOI, 1996-97

Annual Report, RBI, 1995-96.

Status Report on India's External Debt, 1997.

Annexure III.4

Year

Reserves

Reserves to

Reserves to

Short

NFEA to

Reserves

Imports

Imports and

term debt

currency

to Broad

Debt

and

Money

Service

portfolio

Payments

Stocks/

Reserves

($ million)

(in months)

(in months)

(per cent)

(per cent)

(per cent)

Argentina

1991

6005

8.7

5.2

232.9

-117.7

30.0

1992

9990

8.1

6.0

170.3

33.0

31.9

1993

13791

9.9

7.1

94.9

78.2

30.3

1994

14327

8.0

6.1

89.4

57.0

26.8

1995

14288

8.5

NA

NA

22.9

27.5

Chile

1991

7041

10.4

7.9

39.4

291.0

51.9

1992

9168

10.9

8.6

45.0

350.6

56.9

1993

9640

10.4

8.3

55.8

363.9

54.1

1994

13088

13.3

10.7

54.6

500.8

68.5

1995

14140

10.7

NA

NA

558.0

55.6

Indonesia

1991

9258

4.3

3.0

160.1

184.9

18.2

1992

10449

4.6

3.1

178.8

243.8

17.8

1993

11263

4.8

3.2

181.6

NA

NA

1994

12133

4.6

3.1

191.6

NA

NA

1995

13708

4.0

NA

NA

NA

NA

Korea

1991

13701

2.0

1.9

88.9

104.7

12.0

1992

17121

2.5

2.3

93.1

142.6

13.9

1993

20228

2.9

2.6

110.0

146.5

14.5

1994

25639

3.0

2.8

103.2

157.0

15.5

1995

32678

2.9

NA

NA

149.0

16.4

Malaysia

1991

10886

3.6

3.3

24.3

200.4

33.4

1992

17228

5.2

4.8

26.7

278.6

37.9

1993

27249

7.2

6.6

42.6

410.5

47.9

1994

25423

5.1

4.7

47.9

388.5

40.4

1995

23774

3.7

NA

NA

333.9

NA

Mexico

1991

17726

5.6

4.1

151.3

73.7

21.7

1992

18942

4.7

3.3

184.1

82.0

19.4

1993

25110

6. 1

4.3

206.7

112.7

22.6

1994

6278

1.2

0.9

967.6

-21.0

5.0

1995

16847

4.4

NA

NA

-21.6

19.2

New Zealand

1991

2950

4.2

NA

NA

-385.2

9.2

1992

3079

4.0

NA

NA

-800.2

9.9

1993

3337

4.2

NA

NA

-605.3

9.7

1994

3709

3.8

NA

NA

-860.2

9.5

1995

4410

3.8

NA

NA

-941.2

9.4

Philippines

1991

3246

3.0

2.2

160.1

-26.4

18.5

1992

4403

3.4

2.7

132.8

46.8

23.0

1993

4676

3.0

2.4

143.3

128.9

20.4

1994

6017

3.2

2.7

146.1

131.6

20.6

1995

6372

2.7

NA

NA

106.7

17.1

South Africa

1991

899

0.6

NA

NA

-48.7

NA

1992

992

0.6

NA

NA

-111.0

1.5

1993

1020

0.6

NA

NA

-157.0

1.7

1994

1685

0.9

NA

NA

-168.5

2.5

1995

2820

1.1

NA

NA

-125.1

-5.9

Thailand

1991

17517

5.6

4.9

85.7

277.1

24.4

1992

20359

6.0

5.2

84.7

249.2

24.4

1993

24473

6.4

5.3

103.7

217.6

24.7

1994

29332

6.5

5.5

116.9

60.5

26.1

1995

35982

5.9

NA

NA

1.9

27.1

India

1991

5721

3.3

2.3

132.9

14.4

4.9

1992

6452

3.3

2.5

110.8

29.6

5.3

1993

15156

7.3

5.4

52.5

31.8

12.6

1994

20816

7.4

5.6

58.5

60.2

15.0

1995

17126

4.9

3.8

82.9

71.4

10.5

Note

:

Broad Money is measured by M3 in case of India and M2 for all other countries.

NA: Not Available

NFEA: Net Foreign Exchange Assets.

Imports are given in c.i.f. basis.

Reserves exclude gold.

Portfolio Stock is calculated by adding up flow figures. In case of India it is calulated by converting the outstanding stock figures in Rupees into US dollars at end March exchange rate.

Source

:

International Financial Statistics Yearbook 1996 and IFS, April 1.997, IMF.

World Debt Tables 1996, The World Bank.

Economic Survey, 1996-97, GOI.

Status Report on India's External Debt, GOI, 1997.

Annual Report, RBI, 1995-96.

Bank share in

Share of

Non-interest

Net interest

financial

state-owned

operating

margins

Intermediation*

banks @

costs

1994

As a % of total assets#

India

80

87

2.6

2.9

Hongkong

-

0

1.5

2.2

Korea

38

13

1.7

2.1

Singapore

71

0

1.4

1.6

Taiwan

80

57

1.3

2.0

Indonesia

91

48

2.4

3.3

Malaysia

64

8

1.6

3.0

Thailand

75

7

1.9

3.7

Argentina

98

36

8.5

9.2

Brazil

97

48

6.o

6.8

**

Chile

62

14

3.0

6.1

Colombia

86

23

7.3

8.3

Mexico

87

28

3.9

5.1

Venezuela

92

30

5.7

8.1

Memorandum :

United States

23

0

3.7

3.7

Japan

79

0

0.8

1.1

Germany

77

50

***

1.1

1.4

Note

:

Operating costs and net interest margins are shown before loan loss provisions

*

Assets of banks as a percentage of the assets of banks and non bank financial institutions.

@

Percentage share of assets. For India, 1993. For Argentina, June 1996.

#

Average of 1990-94

**

1992-94

***

Not strictly comparable

Source

:

Goldstein Morris and Philip Turner, "Banking crises in Emerging Economics: Origins and Policy Options", BIS Economic Papers, No.46, October 1996.

Annexure III.6

Indicators of Profitability and Concentration in the Banking Industry

Average rate of return

Five largest banks' share

on assets*

of deposits or assets @

India

-0.2

47.3

Hong Kong

1.7

#

39.7

**

Korea

0.6

38.1

Singapore

1.1

39.0

Taiwan

0.7

55.9

Indonesia

0.7

-

Malaysia

1.3

34.8

Thailand

1.3

59.6

Argentina

1.4

37.5

Brazil

0.1

54.9

Chile

1.1

46.7

Colombia

2.3

24.5

Maxico

1.3

61.9

Venezuela

1.4

57.2

Russian Federation

-

29.0

Israel

0.4

85-90

South Africa

0.8

82.0

Memorandum :

United States

0.8

13.8

Japan

0.1

27.3

Germany

0.2

16.7

*

Average 1990-94; for Argentina, Hong Kong and South Africa, 1991-94 and for India, 1991-95

@

In 1994: for Germany and India, 1995 and for Argentina and Singapore, May 1996

#

Locally incorporated licensed banks only

**

Total deposits include both domestic and foreign currency deposits.

Source: Goldstein Morris and Philip Turner, "Banking crises in Emerging Economies : Origins and Policy Options", BIS Economic Papers, No.46, October 1996

Annexure III.7

Loan loss reserves*

Non-performing

Coverage ratio i.e.

(A)

loans @ (B)

A/B

as a percentage of total loans

India

-

19.5

#

-

Hong Kong

2.2

@

3.1

0.71

Korea

1.5

1.0

1.50

Singapore

-

-

1.20

Taiwan

1.1

2.6

0.42

Indonesia

2.6

11.2

0.23

Malaysia

9.6

8.2

1.17

Thailand

1.7

7.6

0.22

Argentina

10.2

@

10.5

0.97

Brazil

1.6

5.9

0.27

Chile

3.5

1.0

3.50

Colombia

1.9

2.5

0.76

Mexico

3.1

**

14.8

0.21

Venezuela

7.0

17.7

0.40

Memorandum :

United States

2.7

1.6

1.69

Japan

1.0

3.3

0.30

Note

:

These figures may not be strictly comparable.

*

Average 1990-94

@

Average 1994-95

#

Relates only to public sector banks

**

Average 1992-94

Source

:

Goldstein, Morris and Philip Turner, "Banking crises in Emerging Economics: Origins and Policy Options", BIS Economic Paners,. No.46,October 1996.

Annexure III.8

Argentina: Summary of the Regulations on Capital Account and other Financial Transactions

Liberalisation Measures

Year

(1)

(2)

1.

Operations in Securities

a)

Controls on Capital Market securities

1)

Purchase in the country by non residents

1991

2)

Sale or issue by non residents

1991

3)

Purchase abroad by residents

1991

4)

Sale or issue abroad by residents

1991

b)

Controls on money market instruments

1)

Purchase in the country by non residents

1991

2)

Sale or issue by non residents

1991

3)

Purchase abroad by residents

1991

4)

Sale or issue abroad by residents

1991

c)

Controls on collective investments securities

1)

Purchase in the country by non residents

1991

2)

Sale or issue by non residents

1991

3)

Purchase abroad by residents

1991

4)

Sale or issue abroad by residents

1991

2.

Controls on derivatives and other instruments

a.

Purchase in the local market by non residents

1991

b.

Sale or issue by non residents

1991

c.

Purchase abroad by residents

1991

d.

Sale or issue abroad by residents

1991

3.

Controls on credit operations

a.

Commercial credits

1)

by residents to non residents

1991

2)

residents from non residents

1991

b.

Financial credits

1)

by residents to non residents

1991

2)

residents from non residents

1991

c.

Guarantees, sureties and financial back-up facilities

1)

by residents to non residents

1991

2)

residents from non residents

1991

4.

Controls on direct investment

a.

Outward direct investment

1991

b.

Inward direct investment

1991

5.

Control on liquidation of direct investment

1991

6.

Control on real estate

a.

Purchase abroad by residents

1991

b.

Purchase locally by non residents

1991

c.

Sale locally by non residents

1991

7.

Provisions specific to commercial banks and other

credits institutions:

controls on :

a.

Borrowing abroad

1991

b.

Maintenance of account abroad

1991

c.

Lending to non residents

1991

(loans, financial or commercial credits)

d.

Lending locally in foreign exchange

1991

e.

Purchase of locally issue securities denominated in

1991

foreign exchange

f.

Other controls : differential treatment of non resident

deposit account or deposit accounts in foreign

exchange

1)

Reserve requirements

1991

2)

Liquid asset requirements

1991

3)

Interest rate controls

1991

4)

Investment regulation

1991

5)

Credit controls

1991

6)

Open foreign exchange position limits

1991

8.

Provision specific to institutional investors @

a.

Limits (max.) on portfolio invested abroad

b.

Limits (min.) on portfolio invested locally

c.

Currency matching regulations on assets/

liabilities composition

9.

Other restrictions imposed by Securities Laws

1991

@

There is a specific provision for Pension Funds Investments.

Source :

Ministry of Finance, Buenos Aires, Argentina.

Annexure III.9

A. Korea : Sequencing of Capital Account Transactions.

CATEGORY

AT PRESENT

1995

1996-97

1998-99

Overseas

Subject to

Partially

Liberalised

Direct

approval

liberalised

Investment

Stock

12 per cent

15 per cent

Ceiling raised

Ceiling raised or

Investment by

abolished

Non residents

Overseas

W300 million;

W1 billion

Liberalised

Portfolio

(W100 million)

(W500 million)

Investment by

Firms,

(individuals)

Overseas

Partially

$1 million;

Ceiling raised

Liberalised,;

Deposit by

allowed; (not

($30 thousand)

(ceiling raised)

Firms; (indv)

allowed)

Overseas Real

Restricted

Restrictions

Restrictions

Liberalised;

estate inv.(indv)

eased

eased

(ceiling raised)

Domestic

Not allowed

Issuance of

Won-denomi-

Liberalised

Issuance by

equities

nated bonds

Non residents

liberalised

liberalised

Overseas

Partially

Restrictions

Equity-linked

Liberalised

Issuance by

allowed

eased

bond

Residents

liberalised

Commercial

Not allowed

SMEs, high-tech

Liberalised for

Liberalised for all

Loans (for

(with the

firms, etc.

SMEs and

firms

facilities

exception of

partially

import)

some public

allowed to all

enterprises)

other firms

Spot

Restrictions

Restrictions

Liberalised

Financing

applied to usage

eased

B. Korea Sequencing of Foreign Exchange Market Reforms

CATEGORY

AT PRESENT

1995

1996-97

1998-99

Exchange Rate

plus or minus

Review

Review plan to

System

1.5 per cent

enlarging the

transition into a

band

floating rate

system