Emerging economies should consider steps to contain fund flows that could cause currency rallies and asset bubbles, World Bank chief Robert Zoellick was quoted as saying on Wednesday, but the International Monetary Fund said such actions would be “undesirable.”
The contrasting views over capital controls come amid rising tension between emerging and developed economies over exchange rates.
Western leaders are worried efforts by emerging economies to weaken their currencies could derail the fragile economic recovery. Officials from developing markets say ultra-low interest rates in rich countries are fuelling massive fund flows into their markets, pushing up their currencies and inflating prices of stocks, property and other assets.
But IMF deputy managing director, Naoyuki Shinohara, said it was natural and welcome for money to shift into economies with strong growth.