02.5.AREAER 2012 Forreading

Annual Report
on
Exchange Arrangements
and Exchange Restrictions
2012
CD-ROM Edition including Overview
Inte r nati o nal M o n e t ar y Fun d

©2012 International Monetary Fund
Cover design: IMF, Multimedia Services Division
Text design: JetSet Communications, Inc.
Cataloging-in-Publication Data
International Monetary Fund.
Annual Report on exchange arrangements and exchange restrictions
[electronic resources]. 1979–
Continues: International Monetary Fund. Annual Report on exchange
restrictions, 1950–1978
1. Foreign exchange—Law and Legislation—Periodicals.2. Foreign exchange
administration—Periodicals. 1. Title
K4440.A13 157 2007 341.7’5179-644506
ISSN 0250-7366
ISBN 978-1-61635-408-4
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Annual Report on Exchange Arrangements and Exchange Restric tions Oc tober 2012
Contents
Country Chapters on CD-ROM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
Preface. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
Abbreviations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Overall Developments during 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Developments in Exchange Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Table 1. De Facto Classification of Exchange Rate Arrangements and Monetary Policy Frameworks, April 30, 2012 . . . . . . . . . 4
Table 2. Exchange Rate Arrangements, 2008–12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Table 3. Changes and Resulting Reclassifications of Exchange Rate Arrangements, 2011–12. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Table 4. Monetary Policy Frameworks and Exchange Rate Anchors, 2008–12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 5. Changes in Exchange Rate Arrangements, Official Exchange Rate, and Monetary Policy Framework, 2011–12 . . . . . 18
Table 6. Foreign Exchange Market Structure, 2009–12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Table 7. a. Changes in Foreign Exchange Markets, 2011–12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Table 7. b. Changes in Currency and Exchange Rate Structures, 2011–12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Table 7. c. Changes in Exchange Subsidies and Exchange Taxes, 2011–12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Member Countries’ Obligations and Status under Article VIII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Table 8. Exchange Restrictions and Multiple Currency Practices, 2009–11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Table 9. Exchange Restrictions and/or Multiple Currency Practices by Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Regulatory Framework for Foreign Exchange Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Provisions Specific to Commercial Banks and Institutional Investors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Table 10. Provisions Specific to the Financial Sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Special Topic: Effects of Capital Flow Liberalization: What Is the Evidence from
Recent Experience in Emerging Market Economies?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Table 11. Countries That Liberalized Capital Flows during 1995–2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Compilation Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Summary Features of Exchange Arrangements and Regulatory Frameworks

for Current and Capital Transactions in IMF Member Countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Country Table Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
iii International Monetary Fund | October 2012

Country Chapters on CD-ROM1
Afghanistan Djibouti
Albania Dominica
Algeria Dominican Republic
Angola Ecuador
Antigua and Barbuda Egypt
Argentina El Salvador
Armenia Equatorial Guinea
Aruba Eritrea
Australia Estonia
Austria Ethiopia
Azerbaijan Fiji
The Bahamas Finland
Bahrain France
Bangladesh Gabon
Barbados The Gambia
Belarus Georgia
Belgium Germany
Belize Ghana
Benin Greece
Bhutan Grenada
Bolivia Guatemala
Bosnia and Herzegovina Guinea
Botswana Guinea-Bissau
Brazil Guyana
Brunei Darussalam Haiti
Bulgaria Honduras
Burkina Faso Hong Kong Special Administrative Region
Burundi Hungary
Cambodia Iceland
Cameroon India
Canada Indonesia
Cape Verde Islamic Republic of Iran
Central African Republic Iraq
Chad Ireland
Chile Israel
China Italy
Colombia Jamaica
Comoros Japan
Democratic Republic of the Congo (DRC) Jordan
Republic of Congo (Congo) Kazakhstan
Costa Rica Kenya
Côte d’Ivoire Kiribati
Croatia Korea
CuraÇao and Sint Maarten Kosovo
Cyprus Kuwait
Czech Republic Kyrgyz Republic
Denmark Lao P.D.R.
1Note: The term “country,” as used in this publication, does not in all cases refer to a territorial entity that is a state as under-
stood by international law and practice; the term also covers some territorial entities that are not states but for which statistical
data are maintained and provided internationally on a separate and independent basis.
iv International Monetary Fund | October 2012

Latvia St. Lucia

Lebanon St. Vincent and the Grenadines
Lesotho Samoa
Liberia San Marino
Libya São Tomé and Príncipe
Lithuania Saudi Arabia
Luxembourg Senegal
Former Yugoslav Republic of Macedonia Serbia
Madagascar Seychelles
Malawi Sierra Leone
Malaysia Singapore
Maldives Slovak Republic
Mali Slovenia
Malta Solomon Islands
Marshall Islands Somalia
Mauritania South Africa
Mauritius Spain
Mexico Sri Lanka
Micronesia Sudan
Moldova Suriname
Mongolia Swaziland
Montenegro Sweden
Morocco Switzerland
Mozambique Syria
Myanmar Tajikistan
Namibia Tanzania
Nepal Thailand
Netherlands Timor-Leste
New Zealand Togo
Nicaragua Tonga
Niger Trinidad and Tobago
Nigeria Tunisia
Norway Turkey
Oman Turkmenistan
Pakistan Tuvalu
Palau Uganda
Panama Ukraine
Papua New Guinea United Arab Emirates
Paraguay United Kingdom
Peru United States
Philippines Uruguay
Poland Uzbekistan
Portugal Vanuatu
Qatar Venezuela
Romania Vietnam
Russia Yemen
Rwanda Zambia
St. Kitts and Nevis Zimbabwe
v International Monetary Fund | October 2012

Preface
The Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER) has been published by
the IMF since 1950. It draws on information available to the IMF from a number of sources, including that
provided in the course of official staff visits to member countries, and has been prepared in close consultation
with national authorities.
This project was coordinated in the Monetary and Capital Markets Department by a staff team directed
by Karl F. Habermeier and comprising Roy Baban, Mehmet Ziya Gorpe, Ivett Jamborne, and Annamaria
Kokenyne. The Special Topic was prepared by Tahsin Saadi and Tao Sun. The AREAER draws on the special-
ized contribution of that department (for specific countries), with assistance from staff members of the IMF’s
five area departments, together with staff of other departments. The report was edited and produced by Linda
Griffin Kean of the External Relations Department with assistance from Lucy Scott Morales.
vi International Monetary Fund | October 2012

Abbreviations
AANZFTA ASEAN–Australia–New Zealand Free Trade Area

ACU Asian Clearing Union (Bangladesh, Bhutan, India, Islamic Republic of Iran,
Myanmar, Nepal, Pakistan, Sri Lanka)
AD Authorized dealer
AFTA ASEAN Free Trade Area (see ASEAN, below)
AGOA African Growth and Opportunity Act (United States)
AMU Asian monetary unit
ASEAN Association of Southeast Asian Nations (Brunei Darussalam, Indonesia, Malaysia,
Philippines, Singapore, Thailand)
BCEAO Central Bank of West African States (Benin, Burkina Faso, Côte d’Ivoire, Guinea-
Bissau, Mali, Niger, Senegal, Togo)
BEAC Bank of Central African States (Cameroon, Central African Republic, Chad, Republic
of Congo, Equatorial Guinea, Gabon)
CACM Central American Common Market (Costa Rica, El Salvador, Guatemala, Honduras,
Nicaragua)
CAEMC Central African Economic and Monetary Community (members of the BEAC)
CAFTA Central American Free Trade Agreement
CAP Common agricultural policy (of the EU)
CARICOM Caribbean Community and Common Market (Antigua and Barbuda, Barbados,
Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis,
St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago); The
Bahamas is also a member of CARICOM, but it does not participate in the Common
Market
CB Central bank
CEFTA Central European Free Trade Area (Bulgaria, Hungary, Poland, Romania, Slovak
Republic, Slovenia)
CEPGL Economic Community of the Great Lakes Countries (Burundi, Democratic Republic
of the Congo, Rwanda)
CET Common external tariff
CFA Communauté financière d’Afrique (administered by the BCEAO) and Coopération
financière en Afrique centrale (administered by the BEAC)
CIMA Code Chartered Institute of Management Accountants Code of Ethics for Professional
Accountants
CIS Commonwealth of Independent States (Armenia, Azerbaijan, Belarus, Georgia,
Kazakhstan, Kyrgyz Republic, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine,
Uzbekistan)
CITES Convention on International Trade in Endangered Species of Wild Fauna and Flora
CMA Common Monetary Area (a single exchange control territory comprising Lesotho,
Namibia, South Africa, and Swaziland)
CMEA Council for Mutual Economic Assistance (dissolved; formerly Bulgaria, Cuba,
Czechoslovakia, German Democratic Republic, Hungary, Mongolia, Poland,
Romania, U.S.S.R., Vietnam)
Note: This list does not include acronyms of purely national institutions mentioned in the country chapters.
vii International Monetary Fund | October 2012

COMESA Common Market for Eastern and Southern Africa (Burundi, Comoros, Democratic
Republic of the Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar,
Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda,
Zambia, Zimbabwe)
EAC East African Community
EBRD European Bank for Reconstruction and Development
EC European Council (Council of the European Union)
ECB European Central Bank
ECCB Eastern Caribbean Central Bank (Anguilla, Antigua and Barbuda, Dominica,
Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the
Grenadines)
ECCU Eastern Caribbean Currency Union
ECOWAS Economic Community of West African States (Benin, Burkina Faso, Cape Verde,
Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger,
Nigeria, Senegal, Sierra Leone, Togo)
ECSC European Coal and Steel Community
EEA European Economic Area
EFSF European Financial Stability Facility
EFSM European Financial Stability Mechanism
EFTA European Free Trade Association (Iceland, Liechtenstein, Norway, Switzerland)
EIB European Investment Bank
EMU European Economic and Monetary Union (Austria, Belgium, Cyprus, Estonia,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, Netherlands,
Portugal, Slovak Republic, Slovenia, Spain)
EPZ Export processing zone
ERM Exchange rate mechanism (of the European monetary system)
EU European Union (formerly European Community); Austria, Belgium, Bulgaria,
Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece,
Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland,
Portugal, Romania, Slovak Republic, Slovenia, Spain, Sweden, United Kingdom)
FATF Financial Action Task Force on Money Laundering (of the OECD)
FDI Foreign direct investment
FEC Foreign exchange certificate
FSU Former Soviet Union
G7 Group of Seven advanced economies (Canada, France, Germany, Italy, Japan, United
Kingdom, United States)
GAFTA Greater Arab Free Trade Agreement
GCC Gulf Cooperation Council (Cooperation Council for the Arab States of the Gulf;
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates)
GSP Generalized System of Preferences
IBRD International Bank for Reconstruction and Development (World Bank)
IMF International Monetary Fund
LAIA Latin American Integration Association (Argentina, Bolivia, Brazil, Chile, Colombia,
Ecuador, Mexico, Paraguay, Peru, Uruguay, Venezuela)
LC Letter of credit
LIBID London interbank bid rate
viii International Monetary Fund | October 2012

LIBOR London interbank offered rate

MERCOSUR Southern Cone Common Market (Argentina, Brazil, Paraguay, Uruguay)
MFN Most favored nation
MOF Ministry of Finance
NAFTA North American Free Trade Agreement
OECD Organization for Economic Cooperation and Development
OECS Organization of Eastern Caribbean States (Antigua and Barbuda, Dominica,
Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines)
OGL Open general license
OTC Over the counter
PACER Pacific Agreement on Closer Economic Relations (of the Pacific Islands Forum;
Australia, Cook Islands, Fiji, Kiribati, Marshall Islands, Micronesia, Nauru, New
Zealand, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu,
Vanuatu)
PICTA Pacific Island Countries Trade Agreement (of the Pacific Islands Forum); Cook
Islands, Fiji, Kiribati, Marshall Islands, Federated States of Micronesia, Nauru, Niue,
Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu)
RCPSFM Regional Council on Public Savings and Financial Markets (an institution of WAEMU
countries that is involved in issuance and marketing of securities authorization)
RIFF Regional Integration Facilitation Forum (formerly Cross-Border Initiative); Burundi,
Comoros, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles,
Swaziland, Tanzania, Uganda, Zambia, Zimbabwe)
SACU Southern African Customs Union (Botswana, Lesotho, Namibia, South Africa,
Swaziland)
SADC Southern Africa Development Community (Angola, Botswana, Democratic Republic
of the Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South
Africa, Swaziland, Tanzania, Zambia, Zimbabwe)
SDR Special drawing right
UCITS Undertakings for the Collective Investment of Transferable Securities
UDEAC Central African Customs and Economic Union (Cameroon, Central African
Republic, Chad, Republic of Congo, Equatorial Guinea, Gabon)
UN United Nations
UNSC UN Security Council
VAT Value-added tax
WAEMU West African Economic and Monetary Union (formerly WAMU; members of the
BCEAO)
WAMA West African Monetary Agency (formerly WACH)
WAMZ West African Monetary Zone
W-ERM II Exchange rate mechanism (of the WAMZ)
WTO World Trade Organization
ix International Monetary Fund | October 2012

Overview
This volume (63rd issue) of the Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER)
provides a description of the foreign exchange arrangements, exchange and trade systems, and capital controls
of all IMF member countries.1 The AREAER reports on restrictions in effect under Article XIV, Section 2, of
the IMF’s Articles of Agreement in accordance with Section 3 of Article XIV, which mandates annual reports
on such restrictions. It also provides information related to Paragraph 16 of the 2007 Surveillance Decision,
which restates the obligation under the IMF’s Articles of Agreement of each member country to notify the
IMF of the exchange arrangement it intends to apply and of any changes in the arrangement.
The AREAER attempts to provide a comprehensive description of exchange and trade systems, going beyond
exchange restrictions or exchange controls. In addition to information related to restrictions on current
international payments and transfers and multiple currency practices (MCPs) maintained under Article XIV
of the IMF’s Articles of Agreement, it includes restrictions and MCPs subject to the IMF’s jurisdiction in
accordance with Article VIII, Sections 2(a) and 3.2 The report also provides information on the operation
of foreign exchange markets and controls on international trade. It describes controls on capital transactions
and measures implemented in the financial sector, including prudential measures. In addition, it reports on
exchange measures imposed by member countries for security reasons, including those notified to the IMF in
accordance with relevant decisions by the IMF Executive Board.3
This report provides detailed information on the de jure and de facto exchange rate arrangements of mem-
ber countries. The de jure arrangements are reported as described by the country authorities. The de facto
exchange rate arrangements are classified into 10 categories.4 The classification is based on the information
available on members’ de facto arrangements, as analyzed by the IMF staff, which may differ from countries’
officially announced (de jure) arrangements. The methodology and the characteristics of the categories are
described in the Compilation Guide that follows this Overview.5
The AREAER aims to provide timely information. In general, the report includes a description of exchange
and trade systems as of December 31, 2011. However, changes in member countries’ exchange rate arrange-
ments are reflected as of April 30, 2012, and in some cases, reference is made to other significant develop-
ments through July 31, 2012.
1 The IMF has 188 member countries, but since South Sudan joined the IMF only in April 2012, information on its exchange
regime will be first reported in the 2013 AREAER. In addition to 187 IMF member countries, this report includes informa-
tion on Hong Kong SAR (People’s Republic of China) as well as Aruba and Curaçao and Sint Maarten (all Kingdom of the
Netherlands).
2 The information on restrictions and MCPs consists of verbatim quotes from each economy’s most recent published IMF staff
report as of December 31, 2011, and represents the views of the IMF staff, which may not necessarily have been endorsed by the
IMF Executive Board. In cases of unpublished IMF staff reports, the quotes have been included verbatim in the AREAER with
the express consent of the member country. In the absence of such consent, the relevant information is reported as “not publicly
available.” If countries implement changes to these restrictions after the relevant IMF report has been issued, these changes will
be reflected in a subsequent issue of the AREAER, covering the year during which the IMF staff report with information on
such changes is issued.
3 The information on exchange measures imposed for security reasons is based solely on information provided by country
authorities.
4 The categories of exchange rate arrangements are (1) hard pegs comprising (a) exchange arrangements with no separate
legal tender and (b) currency board arrangements; (2) soft pegs consisting of (a) conventional pegged arrangements, (b) pegged
exchange rates within horizontal bands, (c) crawling pegs, (d) stabilized arrangements, and (e) crawl-like arrangements; (3) float-
ing regimes, under which the exchange rate is market determined and characterized as (a) floating or (b) free floating; and (4) a
residual category, other managed arrangements. These categories are based on the flexibility of the arrangement and the way it
operates in practice—that is, the de facto regime is described, rather than the de jure or official description of the arrangement..
5 Effective February 2, 2009, the classification methodology was revised to allow for greater consistency and objectivity of
classifications across countries and improved transparency in the context of the IMF’s bilateral and multilateral surveillance.
1 International Monetary Fund | October 2012

To facilitate easy comparison, a single table provides an overview of the characteristics of the exchange and
trade systems of all IMF member countries; see the Summary Features of Exchange Arrangements and
Regulatory Frameworks for Current and Capital Transactions in Member Countries. The Country Table
Matrix lists the categories used in the database, and the Compilation Guide includes definitions and explana-
tions used by member countries to report the data and for use in interpreting this report.
The AREAER is available in several formats. This summary Overview of the year’s developments—together
with the Summary Features of Exchange Arrangements and Regulatory Frameworks for Current and Capital
Transactions in Member Countries, the Country Table Matrix, and the Compilation Guide—is available
in print and online, and the detailed information for each of the 190 member countries and territories is
included on a CD enclosed with the printed summary and in an online database, AREAER Online. In addi-
tion to the information on the exchange and trade system of IMF member countries in 2011, AREAER
Online contains historical data published in previous issues of the AREAER. It is searchable by year, country,
and category of measure and allows cross-country comparisons for time series.6
Overall Developments during 20117

The general trend toward foreign exchange liberalization, despite some tightening to address macrofinan-
cial effects of capital flow volatility, continued during 2011 amid further significant strengthening of the
financial sector regulatory framework. Global economic and financial developments shaped the trends in
member countries’ exchange and trade systems. The global recovery suffered a major setback in late 2011
amid concerns about intensifying strains in the euro area and greater uncertainty about the growth prospects
of major emerging market economies affecting international capital flows. Countries continued to roll back
restrictions and controls on foreign exchange transactions, but external developments created difficulties for
managing exchange rate arrangements, as indicated by a marked shift to transitional exchange rate arrange-
ments. Lingering concerns about the stability of global financial systems and lessons learned from the crisis
motivated further tightening of financial sector regulations, with countries moving ahead to modernize their
financial sector regulatory frameworks.
The 2012 AREAER documents the following major trends and significant developments:
•• The number of IMF member countries increased by one, to 188, when South Sudan joined the IMF on
April 18, 2012, after becoming an independent country on July 9, 2011.
•• There was a pronounced shift from more stable exchange rate arrangements to intermediary regimes against
a backdrop of the worsening euro area crisis and protracted low growth. The euro crisis prompted countries
with safe haven currencies to intensify interventions to fend off appreciation and emerging market econo-
mies to abandon their de facto pegs due to their weakening external balance positions. This shift away from
soft peg arrangements to other managed arrangements mirrors what happened at the beginning of the crisis,
when many countries abandoned less flexible exchange rate arrangements in response to increased volatility
in foreign exchange markets.
•• The exchange rate no longer dominates as the anchor for monetary policy as member countries increasingly
opt to monitor various indicators. The U.S. dollar maintained its position as the dominant exchange rate
anchor but with significantly fewer countries using a dollar anchor. Foreign exchange interventions inten-
sified as emerging market economies experienced exchange rate pressure in both directions, while several
advanced economies experienced massive appreciation pressure.
6 For further information on these resources, see www.imfbookstore.org or www.elibrary.imf.org.

7 This summary includes information on developments through July 31, 2012, except that changes in exchange rate arrange-
ments are included through April 30, 2012.

•• In contrast to the previous year, there was an increased use of foreign exchange auctions not only to manage
foreign reserves but also to influence the exchange rate as countries intensified their interventions. Auctions
can provide a transparent framework for selling or buying foreign exchange, and so they were also used
occasionally for specific short-term purposes.
•• Unlike during 2010–11, changes in forward transactions gravitated toward easing, in part to remove mea-
sures introduced during the crisis. Nonetheless, there was some tightening in forward foreign exchange
markets to address concerns about the potential for derivative transactions to cause financial instability.
Taxes on foreign exchange transactions were adjusted in both directions in response to variations in capital
inflows.
•• The number of IMF member countries accepting the obligations of Article VIII, Sections 2(a), 3, and 4,
increased to 168 when Mozambique accepted them as of May 20, 2011. Nineteen member countries con-
tinue to avail themselves of the transitional arrangements under Article XIV. New member South Sudan
has yet to decide whether it accepts the obligations of Article VIII, Sections 2(a), 3, and 4.
•• Restrictions on current payments and transfers continued to decline slightly, although the number of coun-
tries imposing restrictive measures increased by one. Some exchange restrictions and MCPs were removed
in the context of Mozambique’s acceptance of the obligations of Article VIII, Sections 2(a), 3, and 4 in
2011. While the decline in the total and average number of restrictive measures suggests some overall eas-
ing, the overall direction of the resulting economic effects is difficult to ascertain because the measures vary
widely in scope and economic impact.
•• The trend continued toward greater current account openness. The regulatory framework eased consider-
ably for exports and imports and for current invisible transactions. There was significant liberalization
during the reporting period, in particular with respect to repatriation and surrender of export proceeds and
advance payments for imports, which suggests that more countries are seeking external sources of growth
by facilitating exports and abating concerns about circumvention of capital controls.
•• The overall trend toward liberalization of capital transactions masks two major underlying developments:
continued liberalization by countries that are in the process of opening up their financial accounts, and
adjustments in capital controls in response to changes in the global environment, particularly changes in
capital flows to emerging market economies. A weakened global economic outlook and heightened risk
aversion slowed net inflows to emerging market economies during the second half of 2011, and some
emerging market economies also experienced net outflows. These followed a period of strengthened con-
trols, and likely intensified efforts to ease inflow controls as a means of addressing concerns about reduced
access to foreign funds.
•• The changes made by various countries in their financial sector regulations during 2011 and early 2012 can
be seen as part of broader efforts to strengthen the financial regulatory framework, motivated by lessons
learned from the financial crisis and concerns about capital flow volatility. Several measures harmonized
domestic financial regulations with revised international frameworks and sought to increase liquidity buf-
fers or strengthen host-home supervisory cooperation. The overall tightening of capital control measures in
the financial sector may indicate that nondiscriminatory prudential measures have been found insufficient
to deal with the financial stability concerns in some countries. A tightening of prudential measures and an
easing of capital controls with respect to institutional investors also reflect the ongoing liberalization efforts
of some member countries and the continued enhancement of the regulatory framework for institutional
investors.
The remainder of this overview highlights the major developments covered in this issue of the AREAER.
Details of member countries’ exchange arrangements and their regulatory frameworks for current and capital
transactions are presented in the individual country chapters, which are available on the CD enclosed with
the printed Overview or through AREAER Online.

Developments in Exchange Arrangements
This section documents major changes and trends in the following related areas: exchange rate arrangements, foreign exchange
intervention, monetary anchors, and the operation and structure of foreign exchange markets. It also reports on significant
developments with respect to exchange taxes, exchange rate structures, and national currencies. There are nine tables within this
section. Table 1 summarizes the detailed descriptions in the country chapters by reporting each IMF member country’s mon-
etary policy framework as indicated by country officials and classification of their de facto exchange rate arrangements. Table 2
breaks down countries’ de facto exchange rate arrangements for 2008–12. Table 3 highlights changes in the reclassification of
the de facto exchange rate arrangements between January 1, 2011, and April 30, 2012. Table 4 outlines IMF member coun-
tries’ monetary anchors, and Table 5 reports other changes related to the exchange rate and monetary policy frameworks. Table
6 presents the structure of the foreign exchange markets in the membership, and Table 7.a reports changes regarding foreign
exchange markets. Last, Tables 7.b and 7.c report changes in currency and exchange rate structures and exchange subsidies and
taxes, respectively.
ments with no separate legal tender, currency board arrangements, pegs

Table 1. De Facto Classification of Exchange Rate Arrangements and
Monetary Policy Frameworks, April 30, 2012 (or stabilized arrangements) with or without bands, crawling pegs (or
crawl-like arrangements), and other managed arrangements.
The classification system is based on the members’ actual, de facto
arrangements as identified by IMF staff, which may differ from their Monetary aggregate target
officially announced, de jure arrangements. The system classifies The monetary authority uses its instruments to achieve a target growth
exchange rate arrangements primarily on the basis of the degree to rate for a monetary aggregate, such as reserve money, M1, or M2, and
which the exchange rate is determined by the market rather than by the targeted aggregate becomes the nominal anchor or intermediate
official action, with market-determined rates being on the whole more target of monetary policy.
flexible. The system distinguishes among four major categories: hard
pegs (such as exchange arrangements with no separate legal tender and Inflation-targeting framework
currency board arrangements); soft pegs (including conventional pegged This involves the public announcement of numerical targets for infla-
arrangements, pegged exchange rates within horizontal bands, crawling tion, with an institutional commitment by the monetary authority to
pegs, stabilized arrangements, and crawl-like arrangements); floating achieve these targets, typically over a medium-term horizon. Additional
regimes (such as floating and free floating); and a residual category, key features normally include increased communication with the public
other managed. This table presents members’ exchange rate arrange- and the markets about the plans and objectives of monetary policymak-
ments against alternative monetary policy frameworks in order to high- ers and increased accountability of the central bank for achieving its
light the role of the exchange rate in broad economic policy and illus- inflation objectives. Monetary policy decisions are often guided by the
trate that different exchange rate regimes can be consistent with similar deviation of forecasts of future inflation from the announced inflation
monetary frameworks. The monetary policy frameworks are as follows. target, with the inflation forecast acting (implicitly or explicitly) as the
intermediate target of monetary policy.
Exchange rate anchor
The monetary authority buys or sells foreign exchange to maintain the Other
exchange rate at its predetermined level or within a range. The exchange The country has no explicitly stated nominal anchor, but rather moni-
rate thus serves as the nominal anchor or intermediate target of mone- tors various indicators in conducting monetary policy. This category
tary policy. These frameworks are associated with exchange rate arrange- is also used when no relevant information on the country is available.

Table 1. De Facto Classification of Exchange Rate Arrangements and Monetary Policy Frameworks, April 30, 2012 (continued)
Monetary Policy Framework

Exchange
rate Monetary Inflation-
arrangement Exchange rate anchor aggregate targeting
(number of U.S. dollar Euro Composite Other target framework Other1
countries) (43) (27) (13) (8) (29) (32) (38)
No separate Ecuador Palau Kosovo Kiribati
legal tender El Salvador Panama Montenegro Tuvalu
(13) Marshall Timor-Leste San Marino
Islands Zimbabwe
Micronesia
Currency ECCU Djibouti Bosnia and Brunei
board (12) Antigua and Hong Kong Herzegovina Darussalam
Barbuda SAR Bulgaria
Dominica Lithuania2
Grenada
St. Kitts and
Nevis
St. Lucia
St. Vincent
and the
Grenadines
Conventional Aruba Jordan Cape Verde CAEMC Fiji Bhutan

peg (43) The Bahamas Oman Comoros Cameroon Kuwait Lesotho
Bahrain Qatar Denmark2 Central Libya Namibia
Barbados Saudi Arabia Latvia2 African Morocco3 Nepal
Belize Turkmenistan São Tomé and Rep. Samoa Swaziland
Curaçao United Arab Príncipe Chad
and Sint Emirates Congo,
Maarten Venezuela WAEMU Rep. of
Eritrea Benin Equatorial
Burkina Faso Guinea
Côte d’Ivoire Gabon
Guinea-Bissau
Mali
Niger
Senegal
Togo
Stabilized Cambodia Maldives FYR Vietnam5 Tajikistan4,5 Guatemala5 Angola4,5
arrangement Guyana (04/11) Macedonia (09/11) (06/11) (11/10)
(16) Iraq Suriname Ukraine5 Azerbaijan5
Lebanon Trinidad and Egypt4,6
Tobago (04/11)
Lao P.D.R.5
Crawling peg Nicaragua Botswana Bolivia4,5

(3) (11/10)
Crawl-like Ethiopia Croatia Argentina5 Dominican Haiti5
arrangement Honduras China5 Republic5 Tunisia6
(12) (07/11) Rwanda5 (09/11)
Jamaica Uzbekistan5,7
(06/11) (04/08)
Kazakhstan
Pegged Tonga
exchange
rate within
horizontal
bands (1)

Table 1. De Facto Classification of Exchange Rate Arrangements and Monetary Policy Frameworks, April 30, 2012 (continued)

Exchange
countries) (43) (27) (13) (8) (29) (32) (38)
Other Liberia4 Algeria Bangladesh Belarus
managed (11/11) Iran (05/11) (12/11) (05/11)
arrangement Singapore4 Burundi Costa Rica
(24) (09/11) (07/11) Malaysia
Syria4 Congo, Mauritania
(04/11) Dem. Rep. Myanmar
Vanuatu of the Russia
(11/11) Solomon
Guinea Islands
Kyrgyz Rep. (02/11)
Malawi Sudan
(08/11) Switzerland
Nigeria (09/11)
Paraguay
Yemen
Floating (35) Afghanistan Albania India
(04/11) Armenia8 Mauritius
The Gambia Brazil
Kenya Colombia
Madagascar Georgia8
Mongolia Ghana
Mozambique Hungary
Pakistan4 Iceland
(04/11) Indonesia
Papua New (02/11)
Guinea Korea
Seychelles Moldova
Sierra Leone Peru
Sri Lanka (04/11)
(02/12) Philippines
Tanzania Romania
Uganda Serbia
Zambia South Africa
Thailand
Turkey
Uruguay

Table 1. De Facto Classification of Exchange Rate Arrangements and Monetary Policy Frameworks, April 30, 2012 (concluded)

Exchange
countries) (43) (27) (13) (8) (29) (32) (38)
Free floating Australia Japan
(31) Canada Somalia
Chile United
Czech Rep. States
Israel
(08/11) EMU
Mexico Austria
(11/11) Belgium
New Cyprus
Zealand Estonia
Norway (01/11)
Poland Finland
(12/11) France
Sweden Germany
United Greece
Kingdom Ireland
Italy
Luxembourg
Malta
Netherlands
Portugal
Slovak
Republic
Slovenia
Spain
Source: IMF staff.

Note: If the member country’s de facto exchange rate arrangement has been reclassified during the reporting period, the date of change is indicated in parentheses.
1 Includes countries that have no explicitly stated nominal anchor, but rather monitor various indicators in conducting monetary policy.
2 The member participates in the European Exchange Rate Mechanism (ERM II).
3 Within the framework of an exchange rate fixed to a currency composite, the Bank Al-Maghrib (BAM) adopted a monetary policy framework in 2006 based on various
inflation indicators with the overnight interest rate as its operational target to pursue its main objective of price stability. Since March 2009, the BAM reference interest
rate has been set at 3.25%.
4 The exchange rate arrangement was reclassified retroactively, overriding a previously published classification.
5 The de facto monetary policy framework is an exchange rate anchor to the U.S. dollar.
6 The de facto monetary policy framework is an exchange rate anchor to a composite.
7 This reclassification reflects a methodological correction and does not imply a judgment that there was an alteration in the exchange arrangement or other policies.
The change is applied retroactively to April 30, 2008, the date on which the Revised System for the Classification of Exchange Rate Arrangements became effective.
8 The central bank has taken preliminary steps toward inflation targeting and is preparing for the transition to full-fledged inflation targeting.

Exchange Rate Arrangements and Monetary Policy Frameworks

Developments in exchange rate arrangements over this reporting period were characterized by two distinct
features. First, the worsening of the euro area crisis put significant appreciation pressure on safe haven cur-
rencies, such as the Swiss franc, triggering interventions in the foreign exchange markets in these countries.
Second, weakening external balance positions in a number of emerging market economies increased deprecia-
tion pressure on their currencies, prompting them to abandon their de facto pegs. The overall net result has
been a pronounced shift from “stabilized arrangements” to the residual category, “other managed.” This shift
away from soft peg arrangements mirrors what happened at the beginning of the crisis, when many countries
abandoned less flexible exchange rate arrangements in response to increased volatility in foreign exchange
markets. Although there also have been changes in the composition of most other categories, these almost
completely offset each other.
•• There were no changes between April 2011 and April 2012 among the countries that have no separate legal
tender, currency boards, or conventional pegs. In fact, these categories have been remarkably stable over
the past four years.
•• The number of stabilized arrangements decreased from 23 as of April 30, 2011, to 16 as of April 30,
2012, and the composition of this group changed significantly. Including temporary changes, fourteen
countries left this group, and seven countries joined. Only three new countries joined and remained in
this group: Angola (previously, other managed arrangement), Egypt (previously, crawl-like arrangement),
and Guatemala (previously, floating). Five of the ten countries that moved to a different exchange rate
arrangement category switched to other managed arrangement (Belarus, Burundi, Iran, Malawi, Syria),
one switched to a crawling peg (Bolivia), three to crawl-like arrangements (Honduras, Jamaica, Tunisia),
and one to floating (Pakistan). Tajikistan was classified as having a crawl-like arrangement for part of the
reporting period before returning to a stabilized arrangement. Three other countries (Democratic Republic
of the Congo, Liberia, Sri Lanka) were classified as having stabilized arrangements for part of the reporting
period but eventually reverted to their previous classifications or were reclassified to a different category.
•• The number of countries with crawl-like arrangements remained at 12, although the composition of this
group changed. Four countries joined the group: Honduras, Jamaica, Tunisia (previously, all stabilized
arrangements), and Uzbekistan (previously, crawling peg). Four countries exited the group: Bangladesh,
Democratic Republic of the Congo, Egypt, and Sri Lanka. Two other countries were classified as having
crawl-like arrangements for part of the reporting period but were returned to their previous classifications:
Tajikistan (stabilized arrangement) and Singapore (other managed arrangement).
•• Only one country maintains a pegged exchange rate within horizontal bands, Tonga. There are three addi-
tional countries that have de jure pegged exchange rates within horizontal bands, but two of them have de
facto stabilized arrangements and one has a de facto other managed arrangement.
•• Eight countries were reclassified into the category other managed arrangement (the residual category),
while one country left this group (Angola, which was reclassified as having a stabilized arrangement).
Among the new countries in this group, five previously had stabilized arrangements (Belarus, Burundi, Iran,
Malawi, Syria), two had crawl-like arrangements (Bangladesh, Democratic Republic of the Congo), and
one abandoned its free floating exchange rate arrangement (Switzerland). Liberia was classified as having a
stabilized arrangement for part of the reporting period before being returned to its previous classification
(other managed arrangement). Because the Singapore dollar tracked an appreciating trend against a basket
of currencies within a 2% band, Singapore was retroactively reclassified as having a crawl-like arrangement
as of April 2010, but was subsequently returned to its previous classification (other managed arrangement).
•• The number of countries with floating arrangements decreased by one, with only minor changes to the
composition of the group. There were two new countries: Pakistan (previously, stabilized arrangement)
and Sri Lanka (previously, crawl-like arrangement). Israel and Mexico were reclassified to free floating and
Guatemala to a stabilized arrangement.
•• The number of countries classified as having free-floating arrangements increased by one and appears to
have stabilized near 16 percent, which is about 4 percentage points lower than before the crisis. Two coun-
tries joined this group, Israel and Mexico (both previously floating), after they discontinued their interven-

tions in the foreign exchange markets. Switzerland left this group (now, other managed), owing to increased
official activity in its foreign exchange markets. Poland was classified as floating for part of the reporting
period before being returned to its previous classification (free floating).
Table 2. Exchange Rate Arrangements, 2008–12

(Percent of IMF members as of April 30 each year)1
Exchange Rate Arrangements 20082 20093 20104 2011 2012

Hard pegs 12.2 12.2 13.2 13.2 13.2
No separate legal tender 5.3 5.3 6.3 6.8 6.8
Currency board 6.9 6.9 6.9 6.3 6.3
Soft pegs 39.9 34.6 39.7 43.2 39.5
Conventional peg 22.3 22.3 23.3 22.6 22.6
Stabilized arrangement 12.8 6.9 12.7 12.1 8.4
Crawling peg 2.7 2.7 1.6 1.6 1.6
Crawl-like arrangement 1.1 0.5 1.1 6.3 6.3
Pegged exchange rate within horizontal bands 1.1 2.1 1.1 0.5 0.5
Floating 39.9 42.0 36.0 34.7 34.7
Floating 20.2 24.5 20.1 18.9 18.4
Free floating 19.7 17.6 15.9 15.8 16.3
Residual
Other managed arrangement 8.0 11.2 11.1 8.9 12.6
Source: AREAER database.

1 Includes 187 member countries and three territories: Aruba (Netherlands), Curaçao and Sint Maarten (Netherlands), and Hong Kong SAR
(China).
2 As retroactively classified February 2, 2009; does not include Kosovo and Tuvalu, which became members of the IMF on June 29, 2009, and
June 24, 2010, respectively.
3 As published in the 2009 AREAER; does not include Kosovo and Tuvalu, which became members of the IMF on June 29, 2009, and
June 24, 2010, respectively.
4 As published in the 2010 AREAER; does not include Tuvalu, which became a member of the IMF on June 24, 2010.
Table 3. Changes and Resulting Reclassifications of Exchange Rate Arrangements, 2011–12

(January 1, 2011–April 30, 2012)
Previous Arrangement in the

Country Change Arrangement1 2012 AREAER
Afghanistan Due to the increased flexibility in the Afghani–U.S. dollar Stabilized Floating
exchange rate since the beginning of April 2011, the de arrangement
facto exchange rate arrangement was reclassified to floating
from a stabilized arrangement, effective April 1, 2011.
Angola2 After November 2010, the kwanza consistently remained Other managed Stabilized
within a 2% band against the U.S. dollar, with a one-time arrangement arrangement
adjustment in September 2011. Accordingly, the de facto
exchange rate arrangement was reclassified retroactively to
a stabilized arrangement from other managed arrangement,
effective November 1, 2010. However, the change is
reflected as of January 1, 2011, corresponding to the first
day of the period covered in this year’s AREAER.

Table 3. Changes and Resulting Reclassifications of Exchange Rate Arrangements, 2011–12 (continued)

Bangladesh Against the backdrop of depleting foreign exchange Crawl-like Other managed
reserves, the authorities let the taka depreciate against the arrangement arrangement
U.S. dollar, with the taka departing from the crawl-like
arrangement on December 19, 2011. Since then, direct
interventions by the Bank of Bangladesh have been limited,
initially allowing the exchange rate to move more freely.
However, beginning in mid-February, the exchange rate
stabilized anew. Because the exchange rate doesn’t meet
the criteria of either a stabilized arrangement or floating,
the de facto exchange rate arrangement was reclassified to
other managed from a crawl-like arrangement, effective
December 19, 2011.
Belarus Due to the disruption of the foreign exchange market and Stabilized Other managed
the emergence of a black market where substantial trading arrangement arrangement
was taking place, the de facto exchange rate arrangement
was reclassified to other managed arrangement from a
stabilized arrangement, effective May 24, 2011.
Bolivia2 In late November 2010, the Central Bank of Bolivia Stabilized Crawling peg
restarted nominal adjustments in the exchange rate, arrangement
appreciating the local currency, to reduce inflation
pressures. Therefore, the de facto exchange rate
arrangement was reclassified retroactively to a crawling
peg from a stabilized arrangement, effective November 29,
2010. However, the change is reflected as of January 1,
2011, corresponding to the first day of the period covered
in this year’s AREAER.
Burundi The Burundi franc exchange rate, which is mainly Stabilized Other managed
determined at the Bank of the Republic of Burundi arrangement arrangement
auctions, depreciated slightly against the U.S. dollar in the
first half of 2011, while remaining in the stabilized band.
Beginning July 26, 2011, the exchange rate departed from
the band and depreciated at an increasingly accelerated
rate. The depreciation continued through February
2012, with relatively more flexibility. Accordingly, the de
facto exchange rate arrangement was reclassified to other
managed arrangement from a stabilized arrangement,
effective July 26, 2011.
Democratic From May until mid-November 2011, the franc remained Crawl-like Stabilized
Republic of the stabilized in a narrow band. Accordingly, the de facto arrangement arrangement
Congo exchange rate arrangement was reclassified to a stabilized
arrangement from a crawl-like arrangement, effective May
1, 2011.
Democratic In late November 2011, the franc appreciated sharply Other managed
Republic of the against the U.S. dollar, departing from the stabilized band arrangement
Congo3 for several months. During this time, the Central Bank of
the Democratic Republic of the Congo purchased foreign
exchange in the market, causing the franc to depreciate
gradually back to pre-election levels. Given the increased
flexibility during this period, the de facto exchange rate
arrangement was reclassified to other managed arrangement
from a stabilized arrangement, effective November 23,
2011.


Egypt Following a period marked by a gradual depreciation Crawl-like Stabilized
through March 2011, the pound stabilized against a arrangement arrangement
currency basket and remained in a narrow band after April
2011. Accordingly, effective April 1, 2011, the de facto
exchange rate arrangement was reclassified retroactively to a
stabilized arrangement from a crawl-like arrangement.
Estonia Estonia participates in a currency union with 16 other Currency board Free floating
members of the EU and has no separate legal tender. The
euro, the common currency, floats freely and independently
against other currencies. Thus, the de facto exchange
rate arrangement was reclassified to free floating from a
currency board, effective January 1, 2011.
Guatemala After a mild depreciation in May 2011, the exchange rate Floating Stabilized
remained stable in a narrow band while interventions arrangement
continued in the foreign exchange market. Due to the
stability of the exchange rate during this period, the de
facto exchange rate arrangement was reclassified to a
stabilized arrangement from floating, effective June 1,
2011.
Honduras Following a long period of stability (since May 2005), the Stabilized Crawl-like
lempira was allowed to crawl once again in July 2011, and arrangement arrangement
thereafter followed a steady depreciating trend against the
U.S. dollar, with a small one-time adjustment in November
2011. Accordingly, the de facto exchange rate arrangement
was reclassified to a crawl-like arrangement from a
stabilized arrangement, effective July 25, 2011.
Indonesia In February 2011, the exchange rate left the stabilized band Stabilized Floating
as the rupiah started to appreciate against the U.S. dollar. arrangement
Due to the increased flexibility of the exchange rate, the de
facto exchange rate arrangement was reclassified to floating
from a stabilized arrangement, effective February 14, 2011.
Iran The spread between the interbank exchange rate and Stabilized Other managed
the parallel market rate at exchange bureaus increased arrangement arrangement
substantially since mid-2011, reaching 50% as of the end
of January 2012. In the meantime, the interbank exchange
rate adjusted gradually, initially through January 2012,
and after a one-time depreciation in late January remained
stable through the end of April. Because there was no
discernable pattern for the rial, the de facto exchange rate
from a stabilized arrangement, effective May 1, 2011.
Israel The Bank of Israel ceased its interventions in the foreign Floating Free floating
exchange market after August 2011. Accordingly, the de
facto exchange rate arrangement was reclassified to free
floating from floating, effective August 1, 2011.
Jamaica After June 2011, the exchange rate was allowed to adjust Stabilized Crawl-like
on a gradual basis while official interventions in the foreign arrangement arrangement
exchange market continued. As a result, the Jamaican
dollar followed a depreciating trend against the U.S. dollar
within a margin of less than 2%. Given the pattern of the
exchange rate, the de facto exchange rate arrangement was
reclassified to a crawl-like arrangement from a stabilized
arrangement, effective June 1, 2011.


Liberia2 From January until early November 2011, the Liberian Other managed Stabilized
dollar remained stable in a 2% band vis-à-vis the U.S. arrangement arrangement
dollar. Due to the stability of the exchange rate during
this period, the de facto exchange rate arrangement was
reclassified retroactively to a stabilized arrangement from
other managed arrangement, effective January 5, 2011.
Liberia3 In early November 2011, the exchange rate departed Other managed
from the stabilized band, showing increased but limited arrangement
flexibility while still being managed. Accordingly, the de
facto exchange rate arrangement was reclassified to other
managed arrangement from a stabilized arrangement,
effective November 7, 2011.
Malawi After a devaluation in August 2011, the kwacha showed Stabilized Other managed
limited but sufficient flexibility, departing from the 2% arrangement arrangement
band on both sides, while official actions continued to
play an important role in influencing the exchange rate.
Accordingly, the de facto exchange rate arrangement has
been reclassified to other managed arrangement from a
stabilized arrangement, effective August 8, 2011.
Maldives After adoption of a pegged exchange rate within horizontal Conventional peg Stabilized
bands on April 11, 2011, the rufiyaa remained stabilized arrangement
in a 2% band against the U.S. dollar. Accordingly, the de
facto exchange rate arrangement has been reclassified to a
stabilized arrangement from a conventional peg, effective
April 11, 2011.
Mexico Since November 2011, the Bank of Mexico has not Floating Free floating
intervened in the foreign exchange market through any
mechanism. Accordingly, the de facto exchange rate
arrangement was reclassified to free floating from floating,
effective November 1, 2011.
Pakistan2 Following a period of stability, the rupee departed from Stabilized Floating
the 2% stabilized band against the U.S. dollar in early arrangement
April 2011, and started to float more freely. Because of
the increased flexibility of the exchange rate, the de facto
exchange rate arrangement was reclassified retroactively to
floating from a stabilized arrangement, effective April 11,
2011.
Peru Due to the increased flexibility in the nuevo sol–U.S. dollar Crawl-like Floating
exchange rate in April 2011, the de facto exchange rate arrangement
arrangement was reclassified to floating from a crawl-like
arrangement, effective April 1, 2011.
Poland The National Bank of Poland (NBP) resumed intervention Free floating Floating
to stabilize the market and prevent speculation, with
the first intervention on September 23, 2011, followed
by more on September 30, October 3, November 23,
December 29, and December 30, 2011. Because the NBP
intervened more than three times in a six-month period,
floating from free floating, effective September 23, 2011.
Poland3 Given that NBP interventions ceased after December Free floating
30, 2011, the de facto exchange rate arrangement
was reclassified to free floating from floating, effective
December 31, 2011.


Singapore2 The Singapore dollar tracked an appreciating trend against Other managed Crawl-like
a basket of currencies within a 2% band from April 2010 arrangement arrangement
through September 2011. Therefore, the de facto exchange
rate arrangement was retroactively reclassified to a crawl-
like arrangement from other managed, effective April 14,
2010. However, the change is reflected as of January 1,
2011, corresponding to the first day of the period covered
in this year’s AREAER.
Singapore3 Beginning in September 2011, the Singapore dollar Other managed
departed from the crawl-like band without showing any arrangement
discernible pattern, while the authorities’ official exchange
rate policy of managing the exchange rate remained
unchanged. Accordingly, the de facto exchange rate
from a crawl-like arrangement, effective September 12,
2011.
Solomon Islands After implementation of an updated currency basket Conventional peg Other managed
in February 2011, the Solomon Islands dollar began to arrangement
appreciate and move more freely against the U.S. dollar.
Due to the increased flexibility, the de facto exchange rate
from a conventional peg, effective February 1, 2011.
Sri Lanka In May 2011, the rupee stabilized at around Rs. 110 Crawl-like Stabililzed
against the U.S. dollar, with a one-time step adjustment on arrangement arrangement
November 22, 2011. Therefore, the de facto exchange rate
arrangement was reclassified to a stabilized arrangement
from a crawl-like arrangement, effective May 1, 2011.
Sri Lanka3 After early February 2012, the authorities limited their Floating
interventions in the foreign exchange market and allowed
for increased flexibility against the U.S. dollar. As a result,
the rupee-dollar exchange rate departed from the stabilized
band and moved more freely. Accordingly, the de facto
exchange rate arrangement was reclassified to floating from
a stabilized arrangement, effective February 9, 2012.
Switzerland The Swiss National Bank (SNB) set a minimum exchange Free floating Other managed
rate of CHF 1.20 per euro to stop the appreciation of the arrangement
franc and committed to defending the limit by buying
foreign currency in unlimited quantities. In 2011, to
combat the massive overvaluation of the Swiss franc and to
enforce the minimum exchange rate, the SNB purchased
foreign currency to a value of approximately CHF 17.8
billion. The purchases were made with a wide range of
counterparties in Switzerland and abroad. Based on the role
of official actions in influencing the exchange rate and the
actual relative stability of the Swiss franc vis-à-vis the euro,
other managed arrangement from free floating, effective
September 6, 2011.
Syria Given developments in the official rate, the emergence of Stabilized Other managed
a parallel market, and a newly implemented intervention arrangement arrangement
rate, the de facto exchange rate arrangement was reclassified
retroactively to other managed arrangement from a
stabilized arrangement, effective April 1, 2011.

Table 3. Changes and Resulting Reclassifications of Exchange Rate Arrangements, 2011–12 (concluded)

Tajikistan2 From March through September 2011, the somoni fol Stabilized Crawl-like
lowed a depreciating trend against the U.S. dollar with arrangement arrangement
in a 2% band. Therefore, the de facto exchange rate
arrangement was reclassified retroactively to a crawl-like
arrangement from a stabilized arrangement, effective March
1, 2011.
Tajikistan3 Beginning in late September 2011, the somoni stabilized Stabilized
against the U.S. dollar around a new level and remained arrangement
in a narrow band. Accordingly, the de facto exchange rate
arrangement was reclassified to a stabilized arrangement
from a crawl-like arrangement, effective September 28,
2011.
Tunisia During the transition to a new operational framework, Stabilized Crawl-like
after September 2011, the Central Bank of Tunisia made arrangement arrangement
several adjustments to the level of the exchange rates in the
basket. This resulted in the dinar following a depreciating
trend vis-à-vis the basket within a margin of less than 2%
through April 2012. Therefore, the de facto exchange rate
arrangement was reclassified to a crawl-like arrangement
from a stabilized arrangement, effective September 1, 2011.
Uzbekistan2 Given that the sum has followed a depreciating trend Crawling peg Crawl-like
against the U.S. dollar within a margin of less than 2%, arrangement
the de facto exchange rate arrangement was reclassified
retroactively to a crawl-like arrangement from a crawling
peg, effective April 30, 2008. This reclassification reflects
only a methodological correction and does not imply a
judgment that there has been an alteration in the country’s
exchange arrangement or other policies. The change is
applied retroactively to April 30, 2008, the date on which
the Revised System for the Classification of Exchange Rate
Arrangements became effective. The change is reflected as
of January 1, 2011, corresponding to the first day of the
period covered in this year’s AREAER.
1 This column refers to the arrangement as reported in the 2011 AREAER, except in cases when a reclassification took place during January–April
30, 2011, in which case it refers to the arrangement preceding such a reclassification.
2 The exchange rate arrangement was reclassified retroactively, overriding a previously published classification for the entire reporting period or
part of the period.
3 Cells in the column “Previous Arrangement” are blank if there was a subsequent reclassification during the reporting period.

Monetary Anchors8
The exchange rate no longer retains its dominant role as an anchor for monetary policy in member countries
(Table 4). The most noteworthy changes between April 2011 and April 2012 were in the number of countries
using the U.S. dollar as an exchange rate anchor (it declined the most) and the number of countries classi-
fied as having other monetary frameworks (it increased the most). Overall, 10 countries were recategorized,
reflecting developments in their official monetary anchors9 and further improved reporting.10 As shown in
Table 1, the share of members using as a monetary anchor either the U.S. dollar (43) or a composite (13) both
decreased, whereas the share of members using the euro (27) or other single currency (8) remained the same.
Table 4. Monetary Policy Frameworks and Exchange Rate Anchors, 2008–12

(Percent of IMF members as of April 30 each year)1
Other Monetary Inflation

U.S. Dollar Euro Composite Currency Aggregate Targeting Other2
20083 33.0 14.4 8.0 3.7 11.7 22.9 6.4
20093 28.7 14.4 7.4 4.3 13.3 15.4 16.5
20104 26.5 14.8 7.9 3.7 13.2 16.4 17.5
2011 25.3 14.2 7.4 4.2 15.3 16.3 17.4
2012 22.6 14.2 6.8 4.2 15.3 16.8 20.0
1 Includes 187 member countries and three territories: Aruba (Netherlands), Hong Kong SAR (China), and Curaçao and Sint Maarten
(Netherlands) for 2011 and 2012, which were previously included as the Netherlands Antilles.
2 Includes countries that have no explicitly stated nominal anchor but instead monitor various indicators in conducting monetary policy. This
category is also used when no relevant information on the country is available.
3 Does not include Kosovo and Tuvalu, which became members of the IMF on June 29, 2009, and June 24, 2010, respectively.
4 Does not include Tuvalu, which became a member of the IMF on June 24, 2010.
Fifty-five member countries have an officially announced fixed exchange rate policy—either a currency board
or a conventional peg—which implies the use of the exchange rate as the unique monetary anchor. Among the
66 countries that have floating exchange rate arrangements—floating or free floating—the monetary anchor
does not refer to the exchange rate and varies among monetary aggregates (14), inflation targeting (30), and
other (22, including the 17 euro area countries). The 15 countries implementing soft pegs and other managed
arrangements target monetary aggregates. The 28 countries with either stabilized or crawl-like arrangements
rely on a variety of monetary frameworks, including monetary aggregates and inflation-targeting frameworks.
Other managed arrangements, apart from six countries that use exchange rate anchors, are equally split
between monetary aggregate targets and other monetary policy frameworks.
•• The share of IMF members with the exchange rate as the main policy target fell below half, from 51.1 per-
cent to 47.9 percent. Countries with hard pegs or conventional pegs make up three-quarters of this group.
Three currency unions—the Central African Economic and Monetary Community (CAEMC), Eastern
Caribbean Currency Union (ECCU), and Western African Economic and Monetary Union (WAEMU)
—have in place exchange rate anchors for their respective common currency. However, these countries
account for less than 20 percent of global output and world trade. Exchange rate anchors are by far the first
choice of small, open economies, as suggested in the economic literature.
8 Monetary anchors are defined as the main intermediate target the authorities pursue to achieve their policy goal (which is
overwhelmingly price stability). The inventory of monetary anchors is based mainly on members’ declaration in the context of
the yearly AREAER update or Article IV consultations.
9 The officially announced monetary anchor may differ from the anchor implemented in practice as a result of the de facto
exchange rate arrangement.
10 For the 2010 reporting year, country officials were asked for the first time to report specific information about the mon-
etary policy framework, and as a result the information provided by officials improved considerably. Further improvement was
observed for the 2011 data.

•• The U.S. dollar maintained its position as the dominant exchange rate anchor, but the share of countries
using it as an exchange rate anchor continues to erode, having decreased by more than 10 percent since
April 2008. Five countries changed their monetary policy frameworks from exchange rate anchor to the dol-
lar during 2011–12: Angola, Lao P.D.R., and Sudan now have other monetary policy frameworks that still
include the U.S. dollar in their policy basket ); Malawi targets a monetary aggregate; and Vietnam anchors
its exchange rate to a basket of currencies. Countries that continue to anchor to the dollar also include those
with moderate trade relations with the United States.
•• There was no change in the share or composition of countries using an exchange rate anchor to the euro.
These countries generally have a common history with European countries, such as the Communauté
financiére d’Afrique (CFA) franc area countries, or strong trade relations with western Europe, includ-
ing central and eastern European countries such as Bulgaria, former Yugoslav Republic of Macedonia,
Montenegro, and San Marino.
•• Thirteen countries (one fewer than in 2011) anchor their exchange rate to a currency composite. Four track
the SDR as the sole currency basket or as a component of a broader reference basket; one tracks a euro-
dollar basket; two Pacific Island countries track a composite that includes the Australian and New Zealand
dollars in combination with major global currencies; and the remaining six countries do not disclose the
composition of their reference currency baskets. During the reporting year, both Belarus and Tunisia aban-
doned the euro-dollar basket as their primary monetary anchor and moved to another monetary policy
framework. Vietnam described its monetary policy framework as managed floating with reference to a
currency basket consisting of currencies from countries with which it has trading, finance, or investment
relationships. Russia uses a bicurrency basket as the operating benchmark for transactions in the foreign
exchange market, but it also monitors a range of indicators in conducting monetary policy.
•• The number of countries with an exchange rate anchor to another single currency remained unchanged
(8). Two of these countries use the Australian dollar as their legal currency, and one has a currency board
arrangement with the Singapore dollar. The remaining five have conventional pegged arrangements, three
with the South African rand and two with the Indian rupee. Half the countries in this group are landlocked,
bordering either partially or exclusively the country whose currency they use as their exchange rate anchor.
Most IMF member countries, representing the overwhelming share of global output, are split among mon-
etary aggregate targeting, inflation targeting, and other (which includes monetary policy not committed to
any specific target).
•• The number of countries targeting a monetary aggregate remained 29. This category does not include any
country with a free floating exchange rate arrangement; in fact, monetary aggregates are often the choice
of economies with less developed financial markets and managed exchange rates. The objective of the
arrangement is to influence consumer prices and eventually asset prices through the control of monetary
aggregates. Reserve money is often used as the operational target to control credit growth through the credit
multiplier. During the past year, two countries switched from monetary aggregate targeting to inflation
targeting or other monetary framework (Dominican Republic and Solomon Islands), but two declared
monetary aggregate targeting to be their sole monetary anchor (Kyrgyz Republic, Malawi).
•• The 32 countries that directly target inflation are mostly middle income but include some advanced
economies as well. Of these, 30 have either floating or free floating exchange rate arrangements, a policy
framework that requires considerable monetary authority credibility to make up for the loss of transparent
intermediate targets.11 A few countries refer to their monetary framework as “inflation targeting light,”
suggesting that they also consider indicators other than inflation. During the past year, one country,
Dominican Republic, joined this group by adopting inflation targeting as its formal monetary policy.
•• The 38 countries that are not committed to any specific target (the “other” column in Table 1) include
many of the largest economies such as the euro area, Japan, and the United States, where the monetary
authorities have sufficient credibility to implement the monetary framework without a specific monetary
anchor. Countries in this category also include those with multiple monetary anchors, often including an
11 Inflation targeting aims to address the problem of exchange rates and monetary aggregates that do not have a stable relation-
ship with prices, making intermediary targets less suitable for inflation control.

exchange rate anchor. For example, Tunisia previously anchored its exchange rate to a euro-dollar basket,
but its monetary policy framework has been reclassified as “other” because it now includes monetary aggre-
gates in the policy mix, along with the exchange rate anchor. Lao P.D.R. and Sudan have also switched to
other monetary policy frameworks, indicating that they now use a monetary policy mix that includes the
U.S. dollar. The other countries that joined this group are Angola, Belarus, and Solomon Islands.
Foreign Exchange Interventions

The IMF staff regularly assesses whether the frequency of foreign exchange intervention is consistent with
free-floating arrangements (see the Compilation Guide below).12 These assessments draw on information that
is publicly available or made available to the IMF through other sources, including during official staff visits
to member countries. This section summarizes developments in foreign exchange interventions since January
1, 2011, some of which are described in Table 5.
Intervention Purpose
Official interventions increased during this reporting cycle in response to increased exchange rate pressure
resulting from uncertain growth prospects for major emerging market economies and the worsening euro
area crisis. Emerging market economies experienced exchange rate pressure in both directions, while several
advanced economies experienced massive appreciation pressure. The heightened intervention activity was
evident in self-reporting, various market reports, and significant changes in some members’ foreign exchange
reserves.
Intensified strains in the euro area induced capital flows into safe havens, putting heavy pressure on these
currencies and spurring an overall upsurge in official involvement in foreign exchange markets. For example,
Switzerland announced a ceiling to stop the franc’s appreciation; Japan intervened several times in 2011.
The crisis in Europe also had adverse effects on several regional emerging market economies. The Polish zloty
and the Turkish lira, for example, faced substantial depreciation pressure, and both countries reacted by pro-
viding foreign exchange liquidity to the market. The Turkish central bank also implemented macroprudential
measures to constrain sharp movements in the exchange rate.
Intervention Techniques
Direct purchases and sales of foreign exchange remain the most popular form of intervention. Japan resumed
such interventions in September 2010 for the first time since 2004, and it continued them in 2011. In March
2011, following a sharp rise in foreign exchange volatility as a result of the earthquake in Japan, other Group
of Seven (G7) authorities participated in a coordinated intervention to sell Japanese yen. However, these
interventions did not exceed the limit allowed for a de facto free floating arrangement. Poland intervened in
the foreign exchange market in the form of foreign exchange sales directly by the central bank. Mexico sus-
pended its monthly put option auctions,13 which had been used to intervene in the foreign exchange market
since 2010. Instead, in November 2011, it reinstated a mechanism to trigger foreign exchange sales in case of
a depreciation of more than 2 percent from the previous day; this mechanism had not yet been used through
the end of April 2012. Israel ceased its foreign exchange interventions in August 2011. As a result, both Israel
and Mexico were subsequently reclassified as free floating.
Russia continued to ease the rules guiding its interventions by further widening the band for allowable fluc-
tuations and reducing the size of interventions. Similarly, Guatemala widened the fluctuation margin trigger-
ing interventions, and Uganda made several increases in its daily purchases of foreign exchange in a bid to
build up its reserves.
12 Preannounced programs of purchase and/or sale of foreign exchange typically do not qualify as interventions because the
design of these programs minimizes the impact on the exchange rate. Very small, retail-type transactions are also disregarded.
13 The put option auctions gave option holders the right to sell U.S. dollars to the central bank, provided the exchange rate
had appreciated to more than its 20-day moving average.

Table 5. Changes in Exchange Rate Arrangements, Official Exchange Rate, and Monetary Policy Framework, 2011–12
Country Change
Albania Effective January 16, 2012, the Bank of Albania changed the purpose of its medium-term foreign reserves
requirement to cover more than four months of imports and the short-term external debt of the country.
Previously, the purpose was to meet the net international reserves target.
Azerbaijan Effective January 20, 2011, the peg against the euro-dollar basket was abandoned, and a bilateral peg against
the U.S. dollar was adopted.
Barbados Effective August 3, 2011, the Central Bank of Barbados reduced its selling rate on currency trades from 2.035
Barbados dollars (BDS$) per U.S. dollar to BDS$2.015 per U.S. dollar, thereby lowering the margin for
trades between authorized dealers and the general public.
Belarus Effective January 1, 2011, the central exchange rate of the band was adjusted to the actual value of the
currency basket (1,054.68 rubels (Rbl)) established December 31, 2010. Previously, it was Rbl 1,036.27.
Belarus Effective May 24, 2011, the National Bank of the Republic of Belarus (NBRB) devalued the central exchange
rate to 1810 rubels against the currency basket, widened the exchange rate band from ±10% to ±12%, within
which the exchange rate may weaken or strengthen relative to the value of the basket, and reinstated a limit on
over-the-counter trading of a 2% deviation from official rubel exchange rates.
Belarus Effective October 20, 2011, the NBRB devalued the official exchange rate, thereby unifying the official and
black market exchange rates at the market rate. The NBRB introduced a single trading session, abolished the
official exchange rate bands, and introduced a managed floating regime.
Belarus Effective October 20, 2011, the de jure exchange rate regime was reclassified from a pegged exchange rate
within a horizontal band to a managed floating regime.
Brazil Effective July 1, 2011, the calculation of the reference exchange rate is based on the average of four daily
surveys with the Central Bank of Brazil’s foreign exchange dealers. Previously, the reference exchange rate was
calculated as the average of rates in actual spot transactions weighted by their size.
Brunei Effective January 1, 2011, the Autoriti Monetari Brunei Darussalam (AMBD) replaced the Brunei Currency
and Monetary Board (BCMB). All powers, assets, and liabilities of the BCMB were transferred to the AMBD.
Burundi Effective March 12, 2012, the Bank of the Republic of Burundi began calculating the exchange rate on the
basis of the buying and selling operations conducted by commercial banks with their customers. Previously, it
was based on its auctions (Marché des Enchères Symétriques en Devises).
Chile Effective January 5, 2011, the Central Bank of Chile (CBC) launched a foreign currency purchasing program
aimed at strengthening its international liquidity position through daily auctions to buy US$50 million up to
a total of US$12 billion.
Chile Effective December 16, 2011, auctions under the foreign currency purchasing program ended with the
completion of US$12 billion in purchases by the CBC.
China Effective April 16, 2012, the floating band of the renminbi’s (RMB’s) trading prices against the U.S. dollar in
the interbank foreign exchange market was widened from 0.5% to 1%—i.e., on each business day, the trading
prices of the RMB against the U.S. dollar in the interbank foreign exchange market may fluctuate within
a band of ±1% around the central parity released on the same day by the China Foreign Exchange Trading
System. The spread between the RMB and the U.S. dollar selling and buying prices offered by foreign-
exchange-designated banks to their customers may not exceed 2% of the central parity (previously 1%).
Costa Rica Effective April 18, 2011, the foreign exchange purchase program, which started in September 2010 for
accumulating international reserves, was completed as the US$600 million target was reached. This program,
to the extent that it did not seek to influence the exchange rate in a given direction, helped to increase the
confidence of economic agents (reserves as "insurance") and strengthen Costa Rica’s international liquidity
position; by virtue of its precautionary nature, it had been put in place by the Central Bank of Costa Rica
(BCCR) as part of a financial policy rather than an exchange rate policy.
Costa Rica Effective February 25, 2012, in order to reinforce the economy's "financial shield," the Board of Directors of
the BCCR, in Article 7 of meeting 5532-2012 of January 25, 2012, agreed to implement a program to build
international reserves for the period from February 1, 2012, to December 31, 2013, up to a maximum of
US$1,500 million.
Dominican Effective January 1, 2012, pursuant to a resolution on December 15, 2011, the Monetary Board authorized
Republic the Central Bank of the Dominican Republic to adopt explicit inflation targeting as its monetary policy
framework.

(continued)
Country Change
Egypt Effective April 1, 2011, new official restrictions were imposed on bid-ask spreads quoted by authorized foreign
exchange dealers: (1) the client bid rate was allowed to move from 150 basis points below the interbank bid
rate up to a maximum equal to the interbank bid rate; and (2) the client offer rate must be within a range of
50 to 150 basis points above the interbank offer rate. Previously, there were no official restrictions on bid-ask
spreads quoted by authorized foreign exchange dealers.
Guatemala Effective January 1, 2011, the annual inflation target was maintained at 5.0% ±1% for 2011.
Guatemala Effective January 1, 2011, the fluctuation margin (added to or subtracted from the five-day moving average of
the exchange rate) used to determine whether the Bank of Guatemala may intervene in the foreign exchange
market was widened from 0.5% to 0.6%, in accordance with Monetary Board Resolution No. JM-161-2010.
Guatemala Effective January 1, 2012, the annual inflation target was set at 4.5% ±1% for 2012.
Guinea Effective July 28, 2011, transactions of commercial banks with their customers were bound within a band of
±3% around the last rate set during the weekly auctions.
Honduras Effective July 25, 2011, the Central Bank of Honduras reactivated the crawling band system that had been in
operation until mid-2005.
Iraq Effective January 17, 2012, the Central Bank of Iraq slightly reduced the level around which it stabilizes the
exchange rate from 1,170 dinars (ID) per U.S. dollar to ID 1,166.
Japan Effective March 18, 2011, in the extraordinary circumstances following the earthquake and tsunami, the
Ministry of Finance (MOF), in coordination with other G7 countries, intervened in the foreign exchange
market by selling 692.5 billion yen (¥).
Japan Effective August 4, 2011, the MOF intervened in the foreign exchange market by selling ¥4,512.9 billion.
Japan Effective October 31, 2011, the MOF intervened in the foreign exchange market by selling ¥9,091.6 billion
from October 31 through November 4, 2011.
Kazakhstan Effective February 25, 2011, the trading band that had been established in February 2009 against the U.S.
dollar was abandoned.
Kazakhstan Effective February 28, 2011, a transition to a managed floating exchange rate regime was announced.
Accordingly, the de jure exchange rate arrangement was reclassified to managed floating from a pegged
exchange rate within horizontal bands. (NBRK Board’s Resolution No. 18 of February 15, 2011).
Malawi Effective May 7, 2012, the Reserve Bank of Malawi (RBM) devalued the kwacha (MK) from MK 168 to MK
250 per U.S. dollar.
Malawi Effective May 7, 2012, in anticipation of devaluation, the RBM took steps aimed at allowing market forces to
determine the exchange rate and at improved availability of foreign exchange in the market. Accordingly, the
RBM implemented the revised Guidelines for Foreign Exchange Trading Activities, allowing for more market
determination of the exchange rate.
Maldives Effective April 11, 2011, the Maldives government adopted a new exchange rate regime under which the
rufiyaa (Rf ) floated within a band of 20% in either direction around a central parity of Rf 12.85 per U.S.
dollar. Accordingly, the de jure exchange rate arrangement was classified as a pegged exchange rate within
horizontal bands. Previously, it was a conventional pegged arrangement, with the rufiyaa pegged to the U.S.
dollar at a buying rate of Rf 12.75 per U.S. dollar and a selling rate of Rf 12.85 per U.S. dollar.
Mexico Effective November 30, 2011, the Bank of Mexico (BOM) temporarily suspended the mechanism of monthly
put option auctions until further notice. Previously, the BOM used the put options as an intervention
mechanism, giving the buyer the right to sell U.S. dollars when the exchange rate appreciated above its 20-day
moving average. The BOM sold put options for US$600 million each month from February 2010 through
October 30, 2011, and the BOM bought foreign exchange amounting to US$9.08 billion from option
holders who exercised these options 50 times during the same period.
Mexico Effective November 30, 2011, the BOM announced that it would sell up to US$400 million daily through
auctions at a minimum price that is 2% below (1.02 times the Mexican peso per U.S. dollar) the previous
day’s average in the event of a more than 2% depreciation from the previous day. This mechanism was not
used by April 30, 2012.
Mozambique Effective August 11, 2011, a new mechanism for determining the exchange rate was adopted for transactions
with the government, public entities, and the World Bank which seeks to prevent potential deviations
between the rate used by the Bank of Mozambique in its foreign exchange transactions and the interbank
foreign exchange market rate.

(continued)
Country Change
Myanmar Effective April 2, 2012, the Central Bank of Myanmar (CBM) reference rate is used to set the midrate in the
retail thein phyu (TP) market and in the wholesale/interbank market for authorized dealers.
Myanmar Effective April 2, 2012, the de jure exchange rate arrangement was reclassified to a managed float from a
conventional peg to the Special Drawing Right (SDR) at K 8.50847 per SDR, with the elimination of the
official exchange rate.
Myanmar Effective April 2, 2012, the cut-off rate in the daily foreign exchange auction held by the CBM is used as the
CBM reference exchange rate for that day’s trading. Previously, the kyat was officially pegged to the SDR at K
8.50847 per SDR within a margin of ±2%.
Nigeria Effective November 21, 2011, the Central Bank of Nigeria adjusted the midpoint of the target exchange
rate from 150 naira per U.S. dollar to 155 naira per U.S. dollar with a soft exchange rate band of ±3%
(unchanged) to accommodate continued downward exchange market pressure.
Paraguay Effective May 18, 2011, the Central Bank of Paraguay published Resolution No. 22 (Resolución Nº 22
Acta Nº 31) regarding the implementation of information technology and the transition from the previous
monetary policy regime.
Russia Effective March 1, 2011, the Bank of Russia (BR) took the following actions: (1) It widened the band
of allowable fluctuations of the ruble (Rub) from Rub 4 to Rub 5. (2) It reduced the size of accumulated
interventions on the band’s edge by 5 kopeks from US$650 million to US$600 million.
Russia Effective December 27, 2011, the BR widened the band of allowable fluctuations from Rub 5 to Rub 6
and reduced the size of accumulated interventions on the band’s edge by 5 kopeks from US$600 million to
US$500 million.
Russia Effective July 24, 2012, the BR widened the band of allowable fluctuations from Rub 6 to Rub 7 and reduced
the size of accumulated interventions on the band’s edge by 5 kopeks from US$500 million to US$450
million.
San Marino Effective March 27, 2012, the Republic of San Marino signed a new Monetary Agreement with the European
Union repealing the previous Monetary Agreement dated November 29, 2000. The new agreement authorizes
San Marino to use the euro as its official currency, to grant legal tender status to euro banknotes and coins,
and to issue limited quantities of euro coins (as did the former agreement). Under the new agreement,
San Marino commits to adopt the relevant EU legislation (on euro banknotes and coins; fighting fraud
and counterfeiting; banking and financial legislation, including the prevention of money laundering; and
statistical reporting requirements). The new agreement will come into effect upon notification of the EU of
the completion of the ratification by the parliament of San Marino.
Sierra Leone Effective March 16, 2011, the weekly auction amount was increased from US$700,000 to US$1 million.
Solomon Islands Effective February 1, 2011, even though the method of exchange rate calculation was not changed, the
currency composition and weights of the basket, which are determined on the basis of the volume and
direction of the country’s trade, were updated.
Suriname Effective January 20, 2011, the authorities devalued the currency by 20% vis-à-vis the U.S. dollar in the
official market. With the devaluation, the authorities set a band of Surinamese dollars (SRD) 3.25–3.35
per U.S. dollar, within which all official and commercial market transactions are allowed to take place.
In conjunction with the devaluation, the authorities also did away with the subsidy for imports of infant
formula.
Tajikistan Effective April 28, 2011, the new rules for calculating the official exchange rate of somoni against the U.S.
dollar take into account only exchange rates within a range of ±1.5% to calculate the weighted average.
Tajikistan Effective April 28, 2011, the official exchange rates of somoni against the euro and Russian ruble are
calculated according the rules for determining cross rates using the ratio of the official exchange rate against
the U.S. dollar and the exchange rates of the U.S. dollar against the given currencies that are established on
the international foreign exchange markets on the same day until 4:00 p.m. Previously, the official exchange
rates vis-à-vis the euro and Russian ruble were determined based on the average of buying and selling
transactions in the interbank and intrabank foreign exchange markets.
Tunisia Effective January 1, 2011, the Central Bank of Tunisia (CBT) started posting the volume of transactions
between authorized intermediaries (IATs) and the volume of its daily interventions in the interbank foreign
exchange market on its website. Previously, the CBT did not release intervention data to the public.
Tunisia Effective April 18, 2012, a fixing (i.e., the average of market participants’ quotes) replaced the currency
composite as the reference exchange rate published by the CBT.

(concluded)
Country Change
Uganda Effective July 1, 2011, the Bank of Uganda’s (BOU’s) operational target is the monthly average seven-day
interbank money market rate. The central bank rate (CBR), which is BOU’s policy rate, was first set at
11% during the shadow run conducted in June 2011. The CBR was subsequently set at 13% when the new
framework took effect in July 2011, with a band of ±4%.
Uganda Effective November 4, 2011, the BOU increased the amount of daily reserve buildup purchases to US$1
million from US$0.5 million.
Uganda Effective December 5, 2011, the BOU increased the amount of daily reserve buildup purchases to US$1.7
million from US$1 million.
Uganda Effective February 20, 2012, the BOU revised the framework for reserve buildup from purchasing a fixed
daily amount of US$1.7 million to purchasing amounts between US$1 and US$2 million daily, in response
to the sharp oscillation of the shilling during February 2012.
United States Effective March 18, 2011, following a sharp rise in foreign exchange volatility as a result of the March
2011 earthquake in Japan, on March 18, 2011, U.S. monetary authorities participated in a coordinated
G7 intervention to sell Japanese yen. The operation, which was divided evenly between the U.S. Treasury
Department’s Exchange Stabilization Fund and the Federal Reserve System’s Open Market Account, was
coordinated with Japanese monetary authorities, the European Central Bank, and Canadian and U.K.
monetary authorities.
United States Effective January 25, 2012, the Federal Open Market Committee (FOMC) announced that inflation at the
rate of 2%, as measured by the annual change in the price index for personal consumption expenditures, was
most consistent over the longer term with the Fed’s statutory mandate. In setting monetary policy, the FOMC
will seek to mitigate deviations of inflation from its longer-term goal and deviations of employment from the
FOMC’s assessment of its maximum level.
Venezuela Effective January 11, 2011, the Central Bank of Venezuela unified the official exchange rate at Bs 4.30 per
U.S. dollar from Bs 4.30 and Bs 2.60 per U.S. dollar. The implicit rate in the Transaction System for Foreign-
Currency-Denominated Securities (SITME) remains 5.30 per U.S. dollar. Previously, the exchange rate
structure was multiple, with the following rates: (1) Bs 4.30 per U.S. dollar, official rate for most imports; (2)
Bs 2.60 per U.S. dollar, official rate for imports of food, medicine, and machinery (priority goods); and (3)
Bs 5.30 per U.S. dollar for SITME transactions. Accordingly, the exchange rate structure was changed from
multiple to dual.
Vietnam Effective February 11, 2011, the State Bank of Vietnam (SBV) devalued the dong by increasing the average
interbank exchange rate by 9.3% against the U.S. dollar.
Vietnam Effective February 11, 2011, the SBV narrowed the transaction band to ±1% from ±3% around the average
interbank exchange rate.
Zambia Effective April 2, 2012, with a view to transitioning from reserve money targeting to interest rate targeting by
establishing a key policy interest rate, the Bank of Zambia introduced the “Bank of Zambia Policy Rate” as
another anchor of monetary policy.

Note: Includes changes from January 2011 through July 2012.
Official Exchange Rates

The vast majority (166) of IMF member countries report publishing official exchange rates. This includes not
only countries that have officially determined and/or enforced exchange rates; by definition it also refers to
any reference or indicative exchange rate that is computed and/or published by the central bank. The calcula-
tion of such exchange rates is often based on market exchange rates, such as exchange rates used in interbank
market transactions or in a combination of interbank and bank-client transactions in a specified observation
period. The published exchange rate is used as a guidance to market participants, for accounting and customs
valuation purposes, in exchange transactions with the government, and sometimes mandatorily in specific
exchange transactions. One additional member, Burundi, joined this group during the 2011–12 reporting
period, when it started to calculate the official exchange rate on the basis of the buying and selling operations
of commercial banks with their customers instead of using the auction exchange rate. Among the 24 members
that report having no official or reference exchange rates, half (12) are countries with no separate legal tender.

Foreign Exchange Markets

In 2011, there were only minor changes in the reported foreign exchange market structure of members (Table
6). The most noteworthy developments were the increase in the number of countries maintaining official for-
eign exchange auctions (by 3) and in the number of countries that have over-the-counter interbank markets
(by 6). Table 7.a. includes detailed descriptions of changes concerning foreign exchange market arrangements.
Table 6. Foreign Exchange Market Structure, 2009–12

(Number of IMF members as of April 30 each year)1
20092 20103 2011 2012

Spot exchange market 179 183 186 187
Operated by the central bank 84 105 117 115
Foreign exchange standing facility ... ... 80 77
Allocation 29 29 31 30
Auction 31 29 26 29
Fixing 8 5 5 5
Interbank market 137 151 157 159
Over the counter ... ... 109 115
Brokerage ... ... 45 46
Market making ... ... 73 71
Forward exchange market 127 126 128 127

Note: . . . indicates that information on the arrangement was not separately collected during this period.
1 Includes 187 member countries and three territories: Aruba (Netherlands), Hong Kong SAR (China), and Curaçao and Sint Maarten
(Netherlands) for 2011 and 2012, which were previously included as the Netherlands Antilles.
2 Does not include Kosovo and Tuvalu, which became members of the IMF on June 29, 2009, and June 24, 2010, respectively.
3 Does not include Tuvalu, which became a member of the IMF on June 24, 2010.
Foreign Exchange Standing Facility, Allocations, Auctions, and Fixing

More than half of IMF member countries (115) report maintaining some type of official facility on the part of
the central bank in the spot foreign exchange market, a decrease of two from the previous year. Chile, China,
the Dominican Republic, and Pakistan, which previously had such facilities, reported not having any central-
bank-operated mechanisms in the spot exchange market, whereas Hungary and Uganda began to operate
auctions during the reporting period.
•• Almost two-thirds of members with foreign exchange markets fully or partially operated by the central
bank report maintaining a foreign exchange standing facility (77). Such a facility allows market participants
to buy foreign exchange from or sell it to the central bank at predetermined exchange rates and is usually
instrumental in maintaining a hard or soft peg arrangement. The credibility of such arrangements depends
to a large extent on the availability of foreign exchange reserves backing the facility. All countries with cur-
rency boards (12) or conventional pegs (43) have a foreign exchange standing facility. The remaining 22
countries primarily have stabilized arrangements (8) or other managed arrangements (9). Burundi, Croatia,
and the Dominican Republic report having eliminated their foreign exchange standing facilities.
•• There was an increase (by 3) in the number of countries holding official foreign exchange auctions (29).
Almost half these countries have exchange rate regimes classified as floating (14). Auctions have been
increasingly used to influence the exchange rate rather than solely to manage foreign reserves. For example,
Mexico switched from auctioning put options, which can be exercised if the exchange rate appreciates
above a certain threshold and were designed to accumulate international reserves, to a mechanism involv-
ing foreign exchange sales auctions, which are held if the exchange rate depreciates by more than 2 percent
since the previous day. Similarly, Turkey switched from regular foreign exchange buying auctions to foreign
exchange selling auctions, while changing the rules and daily limits of auctions multiple times during

this reporting period. Chile’s foreign exchange purchase program lasted from January through December
2011 with a total of US$12 billion in preannounced accumulated purchases in daily auctions. Colombia
extended daily direct purchase auctions to build up reserves several times and changed the parameters of
its volatility options mechanism. Paraguay started to hold foreign exchange auctions while continuing its
bilateral foreign exchange operations with banks, albeit at a diminished pace. Myanmar began to hold for-
eign exchange auctions to support the managed floating exchange rate regime in a significant step toward a
more market-oriented and unified exchange rate system. These auctions will also help further develop the
interbank market. Hungary launched a program of foreign exchange sales to provide banks with liquidity
for a specific purpose, although this was discontinued after five months.14
•• The number of countries with allocation systems decreased by one (to 30). Myanmar no longer provides
foreign exchange at official rates for certain public sector imports and instead relies on a regular multiple-
price auction to support the interbank market. Foreign exchange allocation is often used to provide foreign
exchange for strategic imports, such as oil or food, when foreign exchange reserves are scarce. When these
arrangements result in rationing, they can give rise to exchange restrictions.
•• Only Belarus and Mauritania continue to operate fixing sessions on a regular basis. Serbia retains the option
of using fixing sessions when necessary to stabilize the foreign exchange market. Although Syria indicated
using fixing sessions during this reporting period, the extent and regularity of its operations are unknown.
Libya stopped holding fixing sessions and uses both a foreign exchange standing facility and an allocation
system. Fixing sessions are more characteristic of an early stage of market development, when they help
establish a market clearing exchange rate in a shallow market with less-experienced market participants.
Interbank and retail foreign exchange markets

Two additional countries report having a functioning interbank market: Myanmar and Turkmenistan. The
main types of interbank markets in these 159 countries include over-the-counter markets, brokerage arrange-
ments, and market-making arrangements. Thirty-one members allow operation of all three types of systems.
•• Among the countries with a functioning interbank market, in more than two-thirds (115) the interbank
market operates over the counter, with 61 of those operating exclusively over the counter; nearly one-half
(71) employ a market-making arrangement; and slightly less than one-third (46) allow for intermediation
by brokers.
•• Over-the-counter operations account for the majority of interbank markets because in a number of econo-
mies, particularly small economies, market participants cannot undertake the commitments of a market
maker. Over-the-counter foreign exchange markets operate in developed economies as well, where the
market is sufficiently liquid to operate without the support of specific arrangements or institutions.
•• Seven members reported an inactive interbank market.
•• Forty-six members report using brokers (for example, Korea and Singapore).
•• Seventy-one members report the use of market-making agreements in the interbank market, a decrease
of 2 since last year due to reporting corrections. This form of market arrangement is used both in devel-
oped economies (such as Switzerland) and developing economies (such as Zambia) and across all types of
exchange rate arrangements.
More than two-thirds of the membership reports a framework for foreign exchange bureaus. The majority of
these countries impose a licensing requirement, but in a number of them, there are no bureaus in operation.
Several changes were implemented with respect to exchange bureaus during the reporting period. Barbados
required authorized dealers to surrender 5 percent of their gross foreign exchange purchases to the central
bank. Bolivia subjected foreign exchange bureaus to supervision and regulation for the first time. Guinea
tightened foreign exchange regulations by raising the deposit required to operate an exchange bureau from 20
14 The objective of the foreign exchange auctions was to provide banks with foreign currency to close their open positions
arising from early repayment of foreign-currency-denominated mortgages by their clients. Banks could voluntarily participate in
the auctions, in which all bids close to prevailing foreign exchange market rates were accepted.

million to 100 million Guinean francs. Morocco raised the limit on the amount that cash exchange bureaus
in duty-free lounges are allowed to hold. Serbia modified the regulation regarding the excess amount of
dinars that exchange bureaus are required to transfer into their current accounts with banks by extending the
period during which such transfers must be made (easing) but lowering the threshold that defines the excess
amount (tightening). Ukraine increased the ceiling on the daily amount of foreign exchange an individual
may purchase (easing), while beefing up the requirement to present identification and proof of residency of
clients (tightening).
The majority of members refrain from restricting exchange rate spreads and commissions in the interbank
market. The number of countries that allow authorized dealers to freely determine their bid-ask spreads and
commissions in the interbank market increased by 21 to 105. A number of countries report controls on
interbank currency pricing, including Botswana, China, the Democratic Republic of the Congo, Haiti, and
Saudi Arabia. The spread limits are often agreed among market participants in the context of market-making
or other ad hoc agreements. These limitations are generally implemented in the context of fixed or stabilized
exchange rate arrangements.
There were several developments in currency pricing. Belarus repealed the restriction that limited banks’
exchange rates to within 2 percent of the official rate. China widened the interbank trading fluctuation band
from ±0.5 percent to ±1 percent around the central parity released on the same day by the China Foreign
Exchange Trading System. Guinea cancelled banks’ commissions and fees in cash for foreign exchange trans-
actions with clients. Myanmar, as part of a transition to a more flexible exchange rate regime, introduced
a number of measures in foreign exchange trading in order to unify the multiple exchange rate system by
imposing a transaction range of ±0.8 percent around the reference rate for banks’ transactions with clients and
±0.3percent around the reference rate for interbank trading.
Table 7. a. Changes in Foreign Exchange Markets, 2011–12
Country Change Type

Barbados Effective August 3, 2011, the Central Bank of Barbados (CBB) required authorized Tightening
foreign exchange dealers to surrender 5% of their gross foreign exchange purchases to
the CBB.
Belarus Effective September 14, 2011, transactions involving purchases and sales of foreign Tightening
currency for Belarusian rubels on the over-the-counter currency market may not
exceed one lot.
Belarus Effective September 14, 2011, the National Bank of the Republic of Belarus (NBRB) Easing
repealed the 2% limit on deviation from official rubel exchange rates.
Bolivia Effective June 16, 2011, foreign exchange bureaus became subject to the supervision Tightening
and regulation of the Financial System Supervisory Authority, with a deadline of June
29, 2012, for existing bureaus to come into compliance.
Bolivia Effective January 2, 2012, the fee on outward funds transfers by the financial system Tightening
through the Central Bank of Bolivia (CBB) was set at 1%, and the fee on inward
funds transfers by the financial system through the CBB was set at 0.6%.
Burundi Effective March 12, 2012, the Bank of the Republic of Burundi commenced Neutral
biweekly auctions on Tuesdays and Fridays at 9:30 a.m. Each lot of bids is processed
at the offered rate.
Chile Effective January 5, 2011, the Central Bank of Chile (CBC) launched a foreign Neutral
currency purchasing program aimed at strengthening its international liquidity
position through daily auctions to buy US$50 million up to a total of US$12 billion.
Chile Effective December 16, 2011, the auctions under the foreign currency purchasing Neutral
program ended with the completion of US$12 billion in purchases by the CBC.
China Effective January 1, 2011, the State Administration of Foreign Exchange (SAFE) Neutral
classified foreign exchange market makers into three types to increase liquidity in
China’s foreign exchange market and boost its development: spot trading market
makers, forwards and swap trading market makers, and comprehensive market
makers.

Table 7.a. Changes in Foreign Exchange Markets, 2010–11 (continued)
Country Change Type

China Effective March 1, 2011, the SAFE permitted qualified foreign-exchange-designated Easing
banks to launch renminbi (RMB)–foreign exchange cross-currency swap operations
for customers.
China Effective April 1, 2011, the SAFE permitted the interbank foreign exchange market Easing
to introduce trading of RMB versus foreign exchange options and banks to handle
options services for customers.
China Effective December 1, 2011, the SAFE permitted banks to handle RMB versus Easing
foreign exchange option portfolio operations.
China Effective April 16, 2012, the floating band of the RMB’s trading prices against the Easing
U.S. dollar in the interbank foreign exchange market was widened from 0.5% to
1%—i.e., on each business day, the trading prices of the RMB against the U.S.
dollar in the interbank foreign exchange market may fluctuate within a band of ±1%
around the central parity released on the same day by the China Foreign Exchange
Trading System. The spread between the RMB and the U.S. dollar selling and buying
prices offered by foreign-exchange-designated banks to their customers may not
exceed 2% of the central parity (previously 1%).
Colombia Effective February 25, 2011, the Banco de la República (BR) extended daily Neutral
purchases of at least US$20 million until June 17, 2011 (previously, March 15,
2011).
Colombia Effective May 30, 2011, the BR extended daily purchases of at least US$20 million Neutral
until September 30, 2011 (previously, June 17, 2011).
Colombia Effective September 30, 2011, the BR ended the daily purchases of at least US$20 Neutral
million in the spot market in favor of a single auction of US$200 million in direct
purchases and sales of U.S. dollars to prevent excessive volatility in the exchange rate
if the peso moved ±2% from its 10-day moving average.
Colombia Effective October 28, 2011, the BR enabled the volatility options mechanism of Neutral
foreign exchange market intervention, calculated on the basis of the 20-day moving
average with an auction of US$200 million if the peso moved up or down 4%. This
mechanism replaced the previous options auctions mechanism.
Colombia Effective February 6, 2012, the BR suspended the options mechanism to control Neutral
volatility and decided to increase the level of international reserves by making daily
purchases of a minimum of US$20 million through competitive auctions for at least
three consecutive months starting February 6, 2012.
Colombia Effective February 24, 2012, the BR extended the program of daily purchases of a Neutral
minimum of US$20 million to at least August 4, 2012.
Czech Republic Effective April 30, 2011, all noncash foreign exchange institutions were required to Tightening
obtain a new payment institution license or a small payment institution registration.
Egypt Effective April 1, 2011, new official restrictions were imposed on bid-ask spreads Tightening
quoted by authorized foreign exchange dealers: (1) the client bid rate was allowed
to move from 150 basis points below the interbank bid rate to a maximum equal
to the interbank bid rate; and (2) the client offer rate must be within a range of 50
to 150 basis points above the Interbank offer rate. Previously, there were no official
restrictions on bid-ask spreads quoted by authorized foreign exchange dealers.
Fiji Effective January 1, 2012, authorized banks were permitted to write net forward sales Easing
contracts up to 20 million Fiji dollars.
Guatemala Effective January 1, 2011, the fluctuation margin (added to or subtracted from the Easing
five-day moving average of the exchange rate) used to determine whether the Bank of
Guatemala may intervene in the foreign exchange market was widened from 0.5% to
0.6%, in accordance with Monetary Board Resolution No. JM-161-2010.
Guinea Effective March 25, 2011, regulations for exchange bureaus were tightened. In Tightening
particular, the deposit required to operate an exchange bureau was raised from 20
million Guinean francs (GF) to GF 100 million.
Guinea Effective September 16, 2011, commissions and fees in cash foreign exchange Easing
transactions with clients were canceled.

Country Change Type

Hungary Effective October 3, 2011, the Magyar Nemzeti Bank (MNB) launched a program Neutral
of foreign exchange sale tenders to provide banks with foreign currency to close
their open positions arising from early repayment of foreign-currency-denominated
mortgages. Banks may participate in these tenders with their own bids, of which the
MNB accepts all bids close to prevailing foreign exchange market rates in a multiple
rate auction.
Hungary Effective February 27, 2012, the MNB discontinued the program of foreign Neutral
exchange sale tenders.
India Effective February 1, 2011, the revised guidelines on over-the-counter Foreign Neutral
Exchange Derivatives and Overseas Hedging of Commodity Price and Freight Risks
issued December 28, 2010, went into effect.
Indonesia Effective January 21, 2011, the Bank Indonesia (Regulation No. 13/4/PBI/2011] Tightening
revoked the facility that provided foreign exchange liquidity to domestic companies
by conducting spot transactions through commercial banks in connection with
economic activities in Indonesia.
Israel Effective January 27, 2011, the Bank of Israel imposed a 10% reserve requirement Tightening
on nonresidents’ new shekel (NIS)–foreign currency swap transactions and foreign
currency forwards.
Israel Effective July 1, 2011, the Bank of Israel imposed reporting requirements on Tightening
NIS–foreign currency swaps and foreign currency forwards and on nonresidents’
transactions in makam bills and short-term government bonds.
Lebanon Effective November 5, 2011, the total shortage in margin for all operations may not Tightening
exceed 8% of a bank’s capital.
Libya Effective May 1, 2011, the Central Bank of Libya (CBL) imposed a ban on domestic Tightening
retail foreign exchange transactions.
Libya Effective December 31, 2011, institutions resumed foreign exchange transactions. Easing
Lithuania Effective January 1, 2012, electronic money institutions were allowed to perform Neutral
foreign exchange operations to the extent they relate to the issuance of electronic
money and the provision of other payment services.
Maldives Effective April 11, 2011, the buying and selling rates of the U.S. dollar in the official Easing
market were limited by the Maldives Monetary Authority within the bounds of the
20% exchange rate band around the central parity rate of 12.85 Maldivian rufiyaas
(Rf ) per U.S. dollar. Previously, the rufiyaa was pegged to the U.S. dollar at a
buying rate of Rf 12.75 per U.S. dollar and a selling rate of Rf 12.85 per U.S. dollar.
Commercial banks freely exchange other currencies with their clients.
Mauritania Effective June 27, 2011, the amount of bids a bank may submit in the same session Tightening
of the interbank market was capped at 130% of its free reserves (total reserves minus
required reserves).
Mexico Effective November 30, 2011, the Bank of Mexico (BOM) temporarily suspended Neutral
the mechanism of monthly put option auctions until further notice. Previously, the
BOM used the put options as an intervention mechanism, giving the buyer the right
to sell U.S. dollars when the exchange rate appreciated above its 20-day moving
average. The BOM sold put options for US$600 million each month from February
2010 through October 30, 2011, and the BOM bought foreign exchange amounting
to US$9.08 billion from option holders who exercised these options 50 times during
the same period.
Mexico Effective November 30, 2011, the BOM announced that it would sell up to US$400 Neutral
million daily through auctions at a minimum price that is 2% below (1.02 times the
Mexican peso per U.S. dollar) the previous day’s average in the event of a more than
2% depreciation from the previous day. This mechanism was not used by April 30,
2012.
Morocco Effective May 23, 2011, the maximum amount of cash that exchange bureaus in Easing
duty-free (hors douane) departure lounges are allowed to hold was raised to 600,000
Moroccan dirhams (DH) from DH 250,000.

Country Change Type

Mozambique Effective April 27, 2011, the adoption of a new regulation on the interbank exchange Neutral
market discontinued the previous multiple price foreign exchange auction system,
which had not been used since 2009. Until March 2009, the Bank of Mozambique
occasionally held multiple price auctions to sell foreign exchange.
Myanmar Effective October 1, 2011, the thein phyu (TP) currency exchange market was Neutral
introduced.
Myanmar Effective January 26, 2012, customers may buy or sell up the equivalent of Easing
US$10,000 in U.S. dollars, Singapore dollars, euros, and foreign exchange certificates
without providing documentation in the TP market. For transactions exceeding this
amount, further documentation is required. Previously, additional documentation
was required for all transactions.
Myanmar Effective February 9, 2012, private banks with money changer licenses that buy and Tightening
sell foreign exchange may transact at rates in the range of ±0.8% around the midrate
determined by the TP Pricing Committee.
Myanmar Effective February 9, 2012, eligible wholesale private banks authorized to deal in Tightening
foreign exchange may settle foreign exchange transactions among themselves using
foreign exchange accounts at the Central Bank of Myanmar (CBM). The exchange
rate applied for transfers between their foreign exchange accounts may be within the
range of ±0.3% around the midrate determined by the supervisory committee.
Myanmar Effective April 2, 2012, the CBM reference rate is used to set the midrate in the retail Neutral
TP market and in the wholesale/interbank market for authorized dealers.
Myanmar Effective April 2, 2012, the CBM began to hold daily two-way foreign exchange Neutral
auctions of U.S. dollars open to foreign exchange authorized dealer banks.
Nigeria Effective March 23, 2011, the Central Bank of Nigeria began to engage in foreign Neutral
exchange forward transactions with the aim of transforming and deepening Nigerian
financial markets. These transactions take place with authorized dealers in the market
for the benefit of foreign exchange users in the economy.
Pakistan Effective December 21, 2011, a new regulation restricts currency forwards to tenors Tightening
between 1 and 12 months, and they must match in tenor hedgers’ transactions.
Serbia Effective January 1, 2012, according to the Decision on Terms and Conditions for Easing
Performing Exchange Operations (RS Official Gazette, No. 93/2011), the period
during which exchange bureaus must transfer any excess amount of dinars to their
current account with a bank was increased to within seven working days from within
the same day or not later than the following working day.
Serbia Effective January 1, 2012, according to the Decision on Terms and Conditions for Tightening
Performing Exchange Operations (RS Official Gazette, No. 93/2011), the threshold
that determines the excess amount of dinars exchange bureaus must transfer to
their current account with a bank was decreased to double from triple the average
amount of dinars used for the purchase of foreign cash in the month with the highest
purchase in the preceding 12 months.
Sri Lanka Effective January 1, 2012, forward contracts for the sale and/or purchase of foreign Tightening
exchange between authorized dealers and their clients are limited to a maximum
period of 90 days. Such contracts may be concluded only on payments and receipts
in foreign exchange for established transactions for trade in goods and services and
permitted capital transactions.
Sudan Effective April 5, 2012, as a temporary arrangement, each client was allowed to have Tightening
only one foreign currency check not exceeding US$100,000 in the clearinghouse.
Turkey Effective January 3, 2011, the Central Bank of the Republic of Turkey (CBRT) Neutral
increased the regular daily amount to be purchased at auction from US$40 million to
US$50 million, without giving banks the right to sell an optional amount. Previously,
it held regular purchase auctions of US$40 million daily, with an optional US$40
million selling amount granted to successful bidders.
Turkey Effective May 31, 2011, the CBRT lowered the regular daily amount to be purchased Neutral
at auction from US$50 million to US$40 million.
Turkey Effective June 29, 2011, the CBRT lowered the regular daily amount to be purchased Neutral
at auction from US$40 million to US$30 million.

Country Change Type

Turkey Effective July 25, 2011, the CBRT suspended foreign exchange buying auctions. Neutral
Turkey Effective August 5, 2011, the CBRT resumed foreign exchange selling auctions to Neutral
be held on days when it deemed it necessary to provide liquidity to the market.
Institutions authorized to operate in the foreign exchange and banknotes markets
could participate in the auctions. The auctions were not held on (1) U.S. payment
system holidays, (2) half-day workdays, and (3) days the CBRT directly intervened
before the auction opening hours. The amount to be bought and the auction number
were posted on Reuters page CBTQ at 1:30 p.m., and institutions submitted bids
between 1:40 and 2:00 p.m. Offers were sent through the electronic funds transfer
system. The auction was a multiple price auction, and the results were posted on
Reuters page CBTQ. Offers are made at a minimum and in multiples of US$1
million. The maximum subscription could not exceed 20% of total auction volume.
Banks could not change the amount and price of their offers once submitted.
If multiple offers were made at the winning price, the amount was distributed
proportionally. Penalties were applied to banks that violate the auction terms.
Turkey Effective August 9, 2011, the CBRT lending rate for foreign exchange deposits Easing
borrowed by banks in the foreign exchange deposit markets was reduced to 4.5%
from 5.5% for U.S. dollars and to 5.5% from 6.5% for euros.
Turkey Effective September 12, 2011, on days the CBRT decided to sell foreign exchange, Neutral
based on daily market developments, the selling amount announced on Reuters page
CBTQ was the maximum daily amount to be sold. After receiving the offers, when
deemed necessary, the CBRT could sell less than the announced maximum selling
amount for the day.
Turkey Effective November 10, 2011, the CBRT resumed its intermediary function in the Tightening
foreign exchange deposit market. Previously, despite termination of intermediation
by the CBRT, banks could still borrow foreign exchange from the CBRT within their
limits.
Turkey Effective November 29, 2011, the maximum amount of foreign exchange that could Neutral
be sold at auction on the following two workdays began to be announced on Reuters
page CBTQ at 3:00 p.m.
Turkey Effective December 27, 2011, the maximum amount that could be sold at the daily Neutral
selling auctions was set at US$1,350 million, and the maximum amount that could
be sold for the following two working days was set at US$1,700 million until the
next Monetary Policy Committee Meeting. However, except under extraordinary
circumstances, only US$50 million of received offers would be met. Under
extraordinary circumstances, the CBRT, when deemed necessary for price stability
and financial stability, could fulfill more than US$50 million of the offers received,
within the preannounced limit.
Turkey Effective December 27, 2011, the CBRT extended the maturity of foreign exchange Easing
deposits borrowed by banks in the foreign exchange deposit markets from one week
to one month.
Turkey Effective December 30, 2011, foreign exchange selling auctions could be held Neutral
even on days when the CBRT intervened directly in the market before the auction
opening hours.
Turkey Effective January 6, 2012, in order to support additional monetary tightening, the Neutral
CBRT began to conduct intraday foreign exchange selling auctions as necessary. A
ceiling of US$50 million was set for total volume of foreign exchange sold.
Turkey Effective January 25, 2012, the CBRT suspended regular foreign exchange selling Easing
auctions. However, when deemed necessary, the CBRT could continue to conduct
intraday foreign exchange selling auctions, and the maximum daily amount to be
sold was set at US$500 million.
Turkmenistan Effective October 1, 2011, the Law of Turkmenistan on Foreign Exchange Neutral
Regulation and Control in Foreign Economic Relations went into effect.

Table 7.a. Changes in Foreign Exchange Markets, 2010–11 (concluded)
Country Change Type

Ukraine Effective March 1, 2011, authorized banks may perform transactions involving the Easing
purchase and sale of foreign currency for hryvnias in-house and among themselves
during the entire operating day of the Agreement Confirmation System, from 10:00
a.m. to 5:00 p.m. and from 10:00 a.m. to 4:00 p.m. on Fridays and days preceding
holidays.
Ukraine Effective May 20, 2011, authorized banks may operate in the interbank foreign Easing
exchange market simultaneously as both buyers and sellers of each type of foreign
currency and perform transactions on their own behalf within their open foreign
exchange position limits. Previously, banks were not allowed to change their positions
in the interbank market during the course of a day.
Ukraine Effective May 30, 2011, authorized banks were given the right to perform among Easing
themselves foreign exchange swap transactions involving the purchase and sale of
foreign currency in National Bank of Ukraine Classification Group 1 for a term of no
more than 365 days.
Ukraine Effective September 23, 2011, the maximum amount of foreign currency that a Easing
single individual may buy daily from banks was raised from the equivalent of HRV
80,000 to HRV 150,000.
Ukraine Effective September 23, 2011, banks and nonbank financial institutions must require Tightening
clients’ identification and proof of residence for all cash foreign exchange purchases.
Previously, the presentation of identification was required only when the transaction
amount exceeded the equivalent of HRV 15,000.
Ukraine Effective September 30, 2011, by December 17, 2011banks must replace written Neutral
permits for certain operations involving foreign exchange assets with general licenses,
as prescribed under Decree No. 15-93 of the Cabinet of Ministers of Ukraine on the
Foreign Exchange Regulation and Foreign Exchange Control System.
Ukraine Effective February 17, 2012, authorized banks may engage in swap and forward Easing
transactions involving the purchase and sale of bank metals.
Uruguay Effective November 30, 2011, the minimum price fluctuation for forward foreign Tightening
currency transactions executed on formal exchanges (e.g., Bolsa Electronica de
Valores (BEVSA)) was reduced from $0.05 to $0.01.

Other Measures
Most of the changes in other measures during the reporting period refer to taxes on foreign exchange transac-
tions and forward and swap operations (Tables 7.a and 7.b).
•• Unlike during 2010–11, changes in forward transactions gravitated toward easing (see Table 7.a): there were
six easing and five tightening measures and two neutral changes. For example, China, in a series of steps,
permitted and extended the trading in renminbi–foreign currency swaps. In order to gain more control over
foreign exchange market volatility, Israel introduced a 10 percent reserve requirement on nonresidents’ swap
and forward transactions, followed six months later with a reporting requirement on these transactions.
Lebanon imposed a maximum limit of 8 percent of bank capital on margin shortages. Pakistan limited
the currency forward terms between 1 and 12 months, and Sri Lanka to 90 days. As part of its foreign
exchange market liberalization efforts, Ukraine authorized banks to trade in foreign exchange swaps among
themselves. Fiji gave permission to authorized banks to write net forward sales up to 20 million Fiji dol-
lars. Among the neutral changes, the Central Bank of Nigeria began to engage in foreign exchange forward
transactions with authorized dealers.
•• There was no change in the number of countries maintaining dual or multiple exchange rate structures
(see Table 7.b). Madagascar’s exchange rate structure changed to unitary from dual with the elimination
of a preferential exchange rate for oil importers, while the exchange rate structure of Kyrgyz Republic was
reclassified as dual as the official rate may differ by more than 2 percent from market rates because it is

based on the average transaction-weighted rate of the preceding day. Currently, 22 countries are classified
as having more than one exchange rate, of which 15 are dual and 7 multiple. This is a result mainly of spe-
cific exchange rates applied for certain transactions or actual or potential deviations of more than 2 percent
between official and other exchange rates.
•• There were a few changes with respect to foreign exchange taxes and subsidies (see Table 7.c). Aruba
revoked the exemption from foreign exchange commissions for transactions settled in Netherlands Antilles
guilders. Responding to changes in capital inflows, Brazil took a series of steps that increased financial
operations taxes on various types of foreign exchange transactions through the first half of 2011 and eased
some of these taxes by granting a number of exemptions as well as reducing the rates after December 2011.
Foreign exchange taxes appear to be most popular in African countries, followed by members in the western
hemisphere. Overall, 32 countries (one more than last year) tax foreign exchange transactions. On the other
hand, only two countries (Serbia and Sudan) have foreign exchange subsidies in place benefiting certain
export sectors.
•• Finally, a series of neutral changes were recorded (see Table 7.b). A few members introduced new coins or
notes (Malta, Mozambique). The government of Zambia approved the plan to rebase the kwacha during
2012. Estonia adopted the euro.
Table 7. b. Changes in Currency and Exchange Rate Structures, 2011–12
Country Change Type

Estonia Effective January 1, 2011, the currency of Estonia changed from the Neutral
Estonian kroon to the euro when Estonia joined the European Economic
and Monetary Union.
Kyrgyz Republic Effective November 18, 2011, the exchange rate structure was reclassified Tightening
as dual as the official rate may differ by more than 2% from market
rates because it is based on the average transaction-weighted rate of the
preceding day.
Madagascar Effective January 25, 2011, the preferential exchange rate for oil importers Tightening
of 2,000 Malagasy ariary (MGA) per U.S. dollar was reinstated. The
exchange rate structure was reclassified from unitary to dual.
Madagascar Effective March 31, 2011, the preferential rate of MGA 2,000 per U.S. Easing
dollar for oil importers was discontinued. Accordingly, the exchange rate
structure was reclassified from dual to unitary.
Malta Effective November 28, 2011, the Central Bank of Malta issued the first Neutral
in a series of €2 commemorative coins to highlight milestones in Malta’s
constitutional history.
Mozambique Effective October 1, 2011, a new series of Mozambican metical (Mt) Neutral
notes was introduced with the launch of polymer Mt 20, Mt 50, and Mt
100 notes as well as improvements to the Mt 200, Mt 500, and Mt 1,000
denominations to make them more durable.
Myanmar Effective April 2, 2012, the official exchange rate was eliminated. Easing
Sudan Effective April 23, 2011, the premium that authorized banks and foreign Neutral
exchange bureaus pay to buy foreign exchange from the Central Bank of
Sudan above their buying rates, which varied previously, was set constant
at 4.77 Sudanese pounds.
Suriname Effective January 20, 2011, the authorities devalued the currency by 20% Easing
vis-à-vis the U.S. dollar in the official market. With the devaluation, the
authorities set a band of 3.25–3.35 Surinamese dollars per U.S. dollar,
within which all official and commercial market transactions are allowed
to take place. In conjunction with the devaluation, the authorities also did
away with the subsidy for imports of infant formula.

Table 7. b. Changes in Currency and Exchange Rate Structures, 2011–12 (concluded)
Country Change Type

Venezuela Effective January 11, 2011, the Central Bank of Venezuela unified the Easing
official exchange rate at 4.30 bolívar fuertes (Bs) per U.S. dollar from Bs
4.30 and Bs 2.60 per U.S. dollar. The implicit rate in the Transaction
System for Foreign-Currency-Denominated Securities remains Bs 5.30 per
U.S. dollar. Previously, the exchange rate structure was multiple, with the
following rates: (1) Bs 4.30 per U.S. dollar, official rate for most imports;
(2) Bs 2.60 per U.S. dollar, official rate for imports of food, medicine, and
machinery (priority goods); and (3) Bs 5.30 per U.S. dollar for SITME
transactions. Accordingly, the exchange rate structure was changed from
multiple to dual.
Zambia Effective January 23, 2012, the government of Zambia approved the Neutral
recommendation of the Bank of Zambia board of directors to rebase the
kwacha in 2012.

Table 7. c. Changes in Exchange Subsidies and Exchange Taxes, 2011–12
Country Change Type

Angola Effective December 30, 2011, the stamp duty on foreign exchange Easing
operations was decreased from 0.15% to 0.001%, according to Presidential
Legislative Decree No. 6/11 of December 30, 2011.
Aruba Effective January 1, 2012, the exemption from foreign exchange Tightening
commissions for transactions settled in Netherlands Antillean guilders was
revoked (AB 2011 No. 76).
Brazil Effective January 1, 2011, the IOF rate was increased from zero to 2% Tightening
on inflows, including through simultaneous foreign exchange operations
contracted since January 1, 2011, derived from cancellation of depository
receipts in order to convert them into shares traded on the stock exchange.
Brazil Effective January 1, 2011, the rate of the financial operations tax (IOF) Tightening
was increased from zero to 2% on inflows, including through simultaneous
foreign exchange operations related to inflows of foreign direct investment
(FDI) under provisions of Law No. 4.131 (September 3, 1962) contracted
since January 1, 2011, and destined for investment in shares traded on the
stock exchange.
Brazil Effective January 1, 2011, an IOF rate of zero was applied to remittances Easing
of funds invested by foreign investors in the financial and capital markets
related to certain transactions taxed at 2% or 6%.
Brazil Effective January 1, 2011, the IOF rate was decreased from 6% to 2% Easing
on inflows, including through simultaneous foreign exchange operations
by foreign investors to purchase shares of participation investment funds,
emerging companies’ investment funds, or investment funds in shares
of equity funds regulated by the Securities and Exchange Commission
(CVM).
Brazil Effective March 25, 2011, the IOF rate for outflows related to obligations Tightening
of credit card administration companies to pay for purchases by their
clients was increased from 2.38% to 6.38%.
Brazil Effective March 28, 2011, the IOF rate for inflows related to external loans Tightening
with a maximum maturity of 360 days was increased from zero to 6%.
Brazil Effective April 6, 2011, the maximum maturity of external loans subject to Tightening
6% IOF rate was increased from 360 days to 720 days

Table 7. c. Changes in Exchange Subsidies and Exchange Taxes, 2011–12 (concluded)
Country Change Type

Brazil Effective December 1, 2011, the following foreign exchange inflows Easing
transactions are subject to an IOF rate of zero, including through
simultaneous foreign exchange operations: (1) the acquisition of bonds
and securities related to investment projects in the area of infrastructure or
research and development issued in accordance with Law No. 12.431/2011
(previously, the tax rate was 6%); (2) purchases of variable-income
securities traded on a stock exchange or commodities and futures exchange
(previously, 2%); and (3) inflows, including through simultaneous foreign
exchange operations, for purchase of fixed debentures with maturities
longer than four years (previously, 6%).
Brazil Effective December 1, 2011, the following foreign exchange transactions Easing
became subject to an IOF rate of zero for inflows, including through
simultaneous foreign exchange operations: (1) the acquisition of shares in
a public offering (previously, the tax rate was 2%); (2) the acquisition of
shares of participation investment funds, investment funds in emerging
companies, and investment funds in quotas of these funds (previously,
2%); (3) the cancellation of depository receipts for investment in shares
negotiated on a stock exchange (previously, 2%); (4) changes in the
regime of a foreign investor, from direct investment provided by Law
No. 4.131/1962 to investment in shares negotiated on a stock exchange
(previously, 2%); and (5) simultaneous foreign exchange operations
contracted after December 1, 2011, related to inflows of FDI under Law
No. 4.131 (September 3, 1962) and destined for investment in shares
traded on a stock exchange, according to regulations issued by the National
Monetary Council (previously, 2%).
Brazil Effective December 1, 2011, an IOF rate of zero is applied to (1) Easing
simultaneous foreign exchange operations contracted after December
1, 2011, related to inflows of FDI under Law No. 4.131 (September 3,
1962) and destined for investment in shares traded on a stock exchange
(previously, 2%); and (2) simultaneous foreign exchange operations
contracted after January 1, 2011, related to outflows (return) of FDI under
Law No. 4.131 (September 3, 1962) and destined for investment in shares
traded on a stock exchange (previously, 2%).
Brazil Effective February 29, 2012, the IOF rate was reduced from 2% to zero Easing
for settlements of simultaneously contracted foreign exchange transactions
after December 1, 2011, related to inflows regarding to cancellation of
depository receipts that are invested in the acquisition of stocks in the
stock market.
Brazil Effective February 29, 2012, the IOF 6% rate maximum maturity was Tightening
increased from 720 days to 1,080 days for inflows related to external loans.
Brazil Effective March 12, 2012, the IOF 6% rate maximum was increased from Tightening
1,080 days to 1,800 days for inflows related to external loans.
Brazil Effective June 14, 2012, the maximum maturity of external loans subject Easing
to the 6% IOF rate was decreased from 1,800 days to 720 days.
Ukraine Effective January 28, 2011, the mandatory government pension insurance Easing
fee, which was collected on cashless foreign exchange transactions
involving the purchase of foreign currency for hryvnias, was repealed by
Law of Ukraine No. 2921-VI of January 13, 2011, on Amendments to the
Law of Ukraine on the Fee for Mandatory Government Pension Insurance.

Member Countries’ Obligations and Status under Article VIII
This section gives a brief overview of the status of IMF members’ acceptance of the obligations of Article VIII,
Sections 2(a), 3, and 4 of the IMF’s Articles of Agreement. It also describes recent developments in exchange
measures, including exchange restrictions and multiple currency practices (MCPs) subject to the IMF’s juris-
diction under Articles VIII and XIV. In addition, this section covers exchange measures that countries impose
for national and/or international security reasons. This section refers to changes during 2011 and to country
positions as reported in the last IMF staff report issued by the cutoff date, December 31, 2011.
In accepting the obligations of Article VIII, Sections 2(a), 3, and 4, members agree not to impose restrictions
on payments and transfers for current international transactions or engage in discriminatory currency arrange-
ments or MCPs, except with IMF approval. Mozambique accepted these obligations as of May 20, 2011,
increasing to 168 the number of countries that have done so. Nineteen members continue to avail themselves
of transitional arrangements under Article XIV with respect to measures under IMF jurisdiction in effect at
the time they became IMF members.15 IMF staff reports indicate that out of the 19 members, 3 (Afghanistan,
Liberia, Tuvalu) do not have any restrictions; Albania, Angola, Bhutan, and Syria maintain restrictions under
Article XIV only; and 13 maintain restrictions subject to Article VIII.
Exchange Measures
Restrictions and/or multiple currency practices
The number of countries that imposed restrictive measures on current international payments and transfers
increased by 1 to 44 during 2011 (Table 8). The number of restrictions declined slightly, from 100 to 95 mea-
sures, as fewer new exchange measures were identified than eliminated. The average number of restrictions
per member country maintaining such restrictions declined slightly to 2.2. While the decline in the total and
average number of restrictive measures suggests some overall easing, the direction of net economic effects is
difficult to ascertain because the measures vary widely in scope and economic impact.
The total number of Article XIV countries that maintain restrictions or MCPs under Article VIII or Article
XIV declined by 1 to 14, reflecting the elimination of restrictions in Mozambique. Mozambique accounted
for the full decline (by 5) in the total number of restrictions before it accepted the obligations of Article VIII.
The average number of restrictions by each of these Article XIV countries declined slightly to 3.7.
In contrast, the total number of Article VIII countries maintaining restrictions increased by 2 to 30, with a
restrictive measure identified in both Belarus and the Kyrgyz Republic. The number of restrictive measures
maintained by Article VIII countries also increased, lowering slightly the average number of restrictions per
relevant Article VIII member to 4—markedly lower than for Article XIV countries.
There were few changes during 2011 in the types of measures in place. Because of the disaggregation of the
wide variety of measures listed in Table 8, the number of measures in each category is relatively low. Among
Article XIV countries, before Mozambique accepted the obligations of Article VIII, it eliminated five mea-
sures (approval of family remittances, approval of current payments and transfers above a certain threshold, a
restriction on the conversion of nonresident deposits in domestic currency, a restriction on advance payments
for imports, and a restriction on advance payments for a service). Among Article VIII countries, Belarus and
the Kyrgyz Republic adopted exchange rate practices that are considered MCPs. Nepal lifted limits on leisure
travel allowances but imposed a restriction on the transfer of salaries of nonresidents. Suriname adopted an
exchange rate practice deemed an MCP but lifted another MCP by eliminating a special exchange rate for
imports of infant formula.
15 The member countries with Article XIV status are Afghanistan, Albania, Angola, Bhutan, Bosnia and Herzegovina, Burundi,
Eritrea, Ethiopia, Iraq, Kosovo, Liberia, Maldives, Myanmar, Nigeria, São Tomé and Príncipe, Somalia, Syria, Turkmenistan, and
Tuvalu. The exchange regime of Kosovo is under IMF staff review, while that of Somalia will be reviewed as circumstances permit.

Table 8 outlines the types of exchange restrictions and MCPs subject to IMF jurisdiction. Table 9 includes
descriptions of exchange restrictions by country as indicated in the relevant IMF staff reports. Excluded from
Table 9 are member countries that have not consented to publication of exchange restrictions described in
unpublished IMF staff reports.
As shown in Table 8, there are relatively few restrictions on payments for imports, indicating that payments
for external trade transactions are generally unrestricted; when it is considered necessary to control imports,
this is typically done more directly through trade regimes. Restrictions on payments for imports take the form
of advance import deposit or margin requirements (Sudan); restrictions on advance payments (Swaziland); or
requirements to balance imports with export earnings (Bhutan).
The number of restrictions on payments or transfers with respect to invisibles is higher than restrictions
on payments for imports, reflecting some member countries’ practice of conserving foreign exchange by
limiting its use for activities considered low in priority and restraining large transfers of investment income.
Restrictions on invisibles that typically affect individuals include limits on educational allowances, medical
expenses, and travel abroad (Angola, Bhutan, Myanmar, Nepal, Sudan). Restrictions that may have a signifi-
cant effect on the business sector involve restrictions on the payment or transfer of investment income. These
take the form of a requirement to clear taxes and other debts to public sector entities (São Tomé and Príncipe);
an exchange tax on profits (Colombia); restrictions on the payment or transfer of interest from deposits or
bonds (Bangladesh, Iceland); and restrictions and limits on the payment or transfer of profits and dividends
(Angola, Iran, Ukraine).
There are other transaction-specific restrictions. The amortization of external loans is defined as a payment
for current international transaction in Article XXX(d) of the IMF Articles of Agreement. Accordingly, limita-
tions on such amortization give rise to exchange restrictions under IMF jurisdiction (India). Some member
countries impose restrictions on unrequited transfers such as restrictions on transfers of wages and salaries
(Myanmar, Nepal) and private transfers (Angola, Bhutan). Restrictions affecting nonresident accounts arise
mainly through limits on the convertibility or transferability of deposits, the majority of which are related to
frozen foreign exchange accounts in the former Yugoslavia (Bosnia and Herzegovina, Montenegro, Serbia).
Unsettled debit balances on bilateral or regional payments, barter, or clearing arrangements give rise to
exchange restrictions (Albania, Democratic Republic of the Congo, India, Iraq, Syria, Zimbabwe).
Restrictions that have general applicability are listed separately in Table 8. Restrictions in the form of admin-
istered allocation, rationing, or undue delay are imposed by a number of members (e.g., Maldives, Syria).
Other measures in this category include limits on payments above a threshold (Fiji); tax clearance certificates
(Fiji, Iraq); exchange taxes (Angola, Aruba, Gabon); and a requirement to surrender certain export earnings
in exchange for access to the domestic foreign exchange market (Colombia).
Table 8 shows that MCPs arise from a variety of measures. Among these are exchange taxes (Angola,
Colombia); exchange subsidies (Iran); exchange rate guarantees (Tunisia); and multiple price auctions
(Angola, Mongolia, Nigeria, Sierra Leone). Multiple price auctions are often implemented until a well-func-
tioning interbank foreign exchange market develops. When the foreign exchange auction system implemented
by official action allows, or does not prevent that exchange rates at which foreign exchange is sold in each
auction differ from each other by more than 2 percent, the practice is considered an MCP. By far, however,
the most numerous MCPs are those that arise from official actions that cause deviations of more than 2
percent relative to the exchange rate(s) within a market or across markets (or because there is no mechanism

in place to prevent such deviations). Both Article VIII and Article XIV members maintain such practices
(Belarus, Burundi, Democratic Republic of the Congo, Georgia, Guinea, Kyrgyz Republic, Malawi, Maldives,
Mongolia, Myanmar, São Tomé and Príncipe, Suriname, Syria).
Table 8. Exchange Restrictions and Multiple Currency Practices, 2009–11
Member Countries under

Article VIII
Article XIV status status Total
2009 2010 2011 2009 2010 2011 2009 2010 2011
Total number of restrictions and MCPs

53 57 52 46 43 43 99 100 95
maintained by members1
Restrictions on payments for imports 5 5 4 5 2 2 10 7 6
Advance import deposit and margin
2 1 1 2 2 1
requirements
Restrictions on advance payments 1 1 3 1 1 4 1 1
Requirement to balance imports with export
1 1 1 1 1 1
earnings
Restrictive rules on the issuance of import
1 1 1 1 1 1
permits
Tax clearance requirements 1 1 1 1 1 1
Other 1 1 1 1 1 1
Restrictions on payments for invisibles 16 17 16 7 7 5 23 24 21
Education 1 1 1 1 1 1
Medical services 1 1 1 1 1 1
Travel services 4 4 4 1 2 5 6 4
Income on investment 7 8 8 6 5 5 13 13 13
Tax clearance requirement 2 2 2 1 1 1 3 3 3
Exchange tax on profits 1 1 1 1 1 1
Interest on deposits and bonds 1 1 1 2 2 2 3 3 3
Profits and dividends 3 3 3 2 1 1 5 4 4
Foreign exchange balancing for profit
1 1 1 1 1 1
remittances
Clearance of debts to government to remit
1 1 1 1
profits
Advance payment for services 1 1 1 1
Other 2 2 2 2 2 2
Restrictions on amortization on external loans 1 1 1 2 1 1 3 2 2
Restrictions on unrequited transfers 4 5 4 1 4 5 5
Wages and salaries 1 1 1 1 1 1 2
Clearance of debt to government to remit
1 1 1 1
wages
Family remittances 1 1 1 1
Other 2 2 2 2 2 2
Restrictions on nonresident accounts 3 3 2 3 3 3 6 6 5
Transferability of frozen or blocked deposits 1 1 1 2 3 3 3 4 4
Limits on usage of foreign currency
1 1 1 1 1 1
accounts

Table 8. Exchange Restrictions and Multiple Currency Practices, 2009–11 (concluded)
Member Countries under

Article VIII
Article XIV status status Total
2009 2010 2011 2009 2010 2011 2009 2010 2011
Convertibility of nonresident domestic
1 1 1 1
currency deposits
Other 1 1
Restrictions arising from bilateral or regional
payment, barter, or clearing arrangements
Unsettled debit balances 2 3 3 3 4 4 5 7 7
Restrictions with general applicability 8 9 8 9 9 9 17 18 17
Administered allocations, rationing, and
4 4 4 2 3 3 6 7 7
undue delay
Payments above a threshold 1 1 1 1 1 2 1 1
Tax clearance certificates 1 1 1 1 2 2 1
Exchange taxes 1 1 1 3 3 3 4 4 4
Surrender of export earnings for access to
1 1 1 1 1 1
foreign exchange
Other 1 2 2 1 1 1 2 3 3
Multiple currency practices 14 14 14 17 17 18 31 31 32
Exchange taxes 4 4 4 1 1 1 5 5 5
Exchange subsidies 1 1 1 1 1 1
Multiple price auctions 2 2 2 3 2 2 5 4 4
Differentials between official, commercial,
7 7 7 10 10 11 17 17 18
and parallel rates
Margin requirements 1 1 1 1 1 1
Noninterest bearing blocked accounts 1 1 1 1
Noninterest bearing advance import deposit 1 1 1 1 1 1
Exchange rate guarantees 1 1 1 1 1 1
Memorandum items:
Average number of restrictions per member
3.31 3.80 3.71 1.59 1.54 1.43 2.20 2.33 2.16
country maintaining restrictions
Number of countries with restrictions 16 15 14 29 28 30 45 43 44
Sources: AREAER database and IMF staff reports.

1 Includes 187 members and three territories: Aruba (Netherlands), Curaçao and Sint Maarten (Netherlands), and Hong Kong SAR (China).
Exchange measures maintained for security reasons

Some member countries maintain measures imposed solely for national and/or international security reasons,
which could give rise to exchange restrictions. These restrictions, like others, require prior IMF approval
under Article VIII, Section 2(a). However, because the IMF does not provide a suitable forum for discussion
of the political and military considerations leading to measures of this kind, it established a special proce-
dure for such measures to be notified and approved.16 In total, 25 members notified the IMF of measures
introduced solely for security reasons during 2011, while 6 members did so in the first half of 2012. For the
16 See Decision No.144-(52/51) in Selected Decisions and Selected Documents of the International Monetary Fund, Thirty-Sixth
Issue (Washington: IMF, 2012).

most part, these are advanced economies. In general, these restrictions take the form of financial sanctions
to combat financial terrorism or financial sanctions against certain governments, entities, and individuals, in
accordance with UN Security Council resolutions or EU regulations.
Table 9. Exchange Restrictions and/or Multiple Currency Practices by Country

(as of December 31, 2011)
Country1 Exchange Restrictions and/or Multiple Currency Practices2

Albania The IMF staff report on the 2011 Article IV Consultations with Albania states that, as of August, 24, 2011,
Albania’s exchange rate arrangement is free from exchange restrictions and multiple currency practices
subject to Fund jurisdiction under Article VIII. However, the country still avails itself of the transitional
arrangements under Article XIV and maintains exchange restrictions in the form of outstanding debit
balances on inoperative bilateral payment agreements, which were in place before Albania became an IMF
member. These relate primarily to debt in nonconvertible and formerly nonconvertible currencies. Albania
has not imposed new restrictions under Article VIII. (Country Report No. 11/313)
Angola The IMF staff report for the Fifth Review under the Stand-By Arrangement with Angola states that, as of
October 28, 2011, Angola continues to avail itself of the transitional arrangements under the provisions
of Article XIV, Section 2, and maintains two exchange measures, namely, (1) limits on the availability of
foreign exchange for invisible transactions, such as travel, medical or educational allowances and (2) limits
on unrequited transfers to foreign-based individuals and institutions. In addition, Angola maintains two
exchange restrictions resulting from: (1) limits on the remittances of dividends and profits from foreign
investments that do not exceed US$100,000, and (2) the discriminatory application of the 0.015 percent
stamp tax on foreign exchange operations that are subject to approval under Article VIII, Section 2(a).
Angola maintains two multiple currency practices: (1) arising from the Dutch foreign exchange auction, and
(2) the discriminatory application of the 0.015 stamp tax on foreign exchange operations that are subject to
approval under Article VIII, Section 3 . (Country Report No. 11/346)
Aruba The IMF staff report for the 2010 Article IV consultation discussions with the Kingdom of the
Netherlands—Aruba states that, as of October 7, 2010, Aruba maintains a foreign exchange restriction
arising from the foreign exchange tax on payments by residents to nonresidents. This tax, which amounts to
1.3% of the transaction value, was introduced when Aruba was part of the Netherlands Antilles to generate
revenue for the government. (Country Report No. 10/334)
Bangladesh The IMF staff report for the 2011 Article IV consultation with Bangladesh states that, as of October 17,
2011, Bangladesh maintained an exchange restriction on the convertibility and transferability of proceeds of
current international transactions in nonresident taka accounts. (Country Report No. 11/314)
Belarus The IMF staff report on the First Post-Program Monitoring Discussion with Belarus states that, as of July
28, 2011, Belarus maintains a multiple currency practice. The National Bank of the Republic of Belarus
ceased foreign exchange interventions on March 22, and a multiple currency practice emerged (manifested
by the significant spread between the official exchange rate and the black market rate). (Country Report No.
11/277)
Bhutan The IMF staff report for the 2011 Article IV consultation with Bhutan states that, as of May 13, 2011,
Bhutan continues to avail of transitional arrangements under provisions of Article XIV, Section 2, and
maintains restrictions under it. Bhutan also maintains exchange restrictions subject to IMF approval under
Article VIII, Section 2(a). (Country Report No. 11/123)
Bosnia and The IMF staff report for the 2010 Article IV Consultation, Second and Third Reviews under the Stand-By
Herzegovina Arrangement with Bosnia and Herzegovina, states that, as of September 22, 2010, Bosnia and Herzegovina
has not accepted the obligations under Article VIII Sections 2, 3, and 4 and therefore avails itself of the
transitional arrangements under Article XIV. Bosnia and Herzegovina no longer maintains restrictions
under the transitional provisions of Article XIV. It maintains restrictions on the transferability of balances
and interest accrued on frozen foreign-currency deposits, subject to IMF jurisdiction under Article VIII.
(Country Report No. 10/348)

Table 9. Exchange Restrictions and/or Multiple Currency Practices by Country (continued)

Burundi The IMF staff report for the Seventh Review under the Three-Year Arrangement under the Extended
Credit Facility states that, as of December 30, 2011, Burundi has one multiple currency practice that is
inconsistent with Article VIII, Section 2(a): the exchange rate used for government transactions may differ
by more than 2% from market exchange rates. Burundi modified the 2010 foreign exchange regulation
on March 3, 2011. Consequently, the two foreign exchange restrictions mentioned in Country Report
No. 11/104 relating to (1) a tax clearance requirement for certain current international transactions such
as payments of moderate amounts for amortization of loans or for depreciation of direct investments by
nonresidents and (2) the limitations on the availability of foreign exchange for the making of payments and
transfers for current international transactions based on noncompliance with obligations that are unrelated
to such transactions are no longer in place. (Country Report No. 12/28)
Colombia The IMF staff report for the 2011 Article IV consultation with Colombia states that, as of July 7, 2011,
Colombia maintained two exchange measures subject to IMF approval under Article VIII: (1) a multiple
currency practice and an exchange restriction arising from a tax on outward remittances of nonresident
profits earned before 2007 and that have been retained in the country for less than five years; and (2)
an exchange restriction arising from the special regime for the hydrocarbon sector, in which branches of
foreign corporations are required to either surrender their export proceeds to the authorities or agree to a
government limitation on their access to the foreign exchange market . (Country Report No. 11/224)
Democratic The IMF staff report for the Third Review under the Three-Year Arrangement under the Extended Credit
Republic of the Facility with the Democratic Republic of the Congo (DRC) states that, as of April 15, 2011, the DRC
Congo maintains measures that give rise to one restriction and one multiple currency practice subject to IMF
approval. The exchange restriction involves an outstanding net debt position against other contracting
members under the inoperative regional payments agreement with the Economic Community of the Great
Lakes Countries. The multiple currency practice relates to a fixed exchange rate set quarterly applying to
transactions through the bilateral payments agreement with Zimbabwe. (Country Report No. 11/190)
Fiji The IMF staff report for the 2010 Article IV Consultations states that, as of January 19, 2011, the Republic
of Fiji maintained restrictions subject to Article VIII arising from the Fiji Islands Revenue and Customs
Authority tax certification requirements before foreign companies can remit profits abroad and from limits
on large payments (e.g., oil imports and dividends repatriation of foreign banks). (Country Report No.
11/85)
Gabon The IMF staff report on the 2010 Article IV Consultations states that, as of February 3, 2011, owing
to the imposition of a tax on all wire transfers, including for making payments and transfers for current
international transactions, Gabon maintains an exchange restriction subject to IMF approval under Article
VIII, Section 2(a), of the Articles of Agreement. (Country Report No. 11/97)
Georgia The IMF staff report on the Ninth Review under the Stand-By Arrangement states that, as of May 25,
2011, Georgia maintains a multiple currency practice. The government uses the official exchange rate for
budget and tax accounting purposes as well as for all payments between the government and enterprises and
other legal entities. The official rate may differ by more than two percent from freely determined market
rates, which gives rise to a multiple currency practice. In practice, the official and market rates have never
differed by more than 2% since the introduction of foreign exchange auctions in March 2009. (Country
Report No. 11/146)
Guinea The IMF staff report on a Staff Monitored Program with Guinea states that, as of July 1, 2011, Guinea
maintains a multiple currency practice as the value of the official rate lags the weighted average commercial
bank rate on which it is based by one day. (Country Report No. 11/251)
Iceland The IMF staff report for the Sixth Review under the Stand-by Arrangement with Iceland states that, as
of August 16, 2011, Iceland maintains an exchange restriction arising from limitations imposed on the
conversion and transfer of interest on bonds (whose transfer the foreign exchange rules apportion depending
on the period of the holding). (Country Report No. 11/263)
India The IMF staff report for the 2010 Article IV consultation with India states that, as of December 7, 2010,
India maintains the following restrictions on the making of payments and transfers for current international
transactions, which are subject to IMF approval under Article VIII, Section 2(a): restrictions related to the
nontransferability of balances under the India-Russia debt agreement; restrictions arising from unsettled
balances under inoperative bilateral payments arrangements with two Eastern European countries; and a
restriction on the transfer of amortization payments on loans by non-resident relatives. (Country Report
No. 11/50)


Iran The IMF staff report for the 2011 Article IV consultation with the Islamic Republic of Iran states that, as
of July 6, 2011, Iran maintains one exchange restriction and a multiple currency practice subject to IMF
jurisdiction under Article VIII, Sections 2(a) and 3.The exchange restriction arises from limitations on
the transferability of rial profits from certain investments under the Foreign Investment Promotion and
Protection Act and from limitations on other investment-related current international payments under
this act. The multiple currency practice arises from the budget subsidies for foreign exchange purchases in
connection with payments of certain letters of credit opened prior to March 21, 2002, under the previous
multiple exchange rate system. (Country Report No. 11/241)
Iraq The IMF staff report on the Second Review under the Stand-By Arrangement states that, as of March 7,
2011, Iraq maintained four measures (plus one exchange restriction maintained for national or international
security) that have been identified to give rise to exchange restrictions subject to IMF approval: (1) the
requirement to pay all obligations and debts to the government before proceeds of investments of investors,
and salaries and other compensation of non-Iraqi employees may be transferred out of Iraq, (2) the
requirement to submit a tax certificate and a letter of non-objection stating that the companies do not owe
any taxes to the government before non-Iraqi companies may transfer proceeds of current international
transactions out of the country, (3) the requirement that before non-Iraqis may transfer proceeds in excess
of 15 million Iraqi dinars out of Iraq, the banks are required to give due consideration of legal obligations
of these persons with respect to official entities, which must be settled before allowing any transfer, and (4)
an Iraqi balance owed to Jordan under an inoperative bilateral payments agreement. (Country Report No.
11/75)
Kosovo The IMF staff report for the 2011 Article IV Consultations with Kosovo states that as of June 22, 2011,
the IMF staff is in the process of assessing whether Kosovo imposes exchange restrictions and/or multiple
currency practice subject to IMF jurisdiction. (Country Report No. 11/210)
Kyrgyz Republic The IMF staff report on the First Review under the Three-Year Arrangement under the Extended Credit
Facility states that, as of November 18, 2011, the Kyrgyz Republic maintains a multiple currency practice,
which predates the arrangement, arising from the use of the official exchange rate for government
transactions. The official rate may differ by more than 2% from market rates because it is based on the
average transaction weighted rate of the preceding day. In practice, the official and market rates have never
differed by more than 2%. (Country Report No. 11/354)
Latvia The IMF staff report for the Fourth Review under the Stand-by Arrangement with Latvia states that, as of
May 11, 2011, Latvia maintained a partial deposit freeze on Parex Bank, which gives rise to an exchange
restriction. (Country Report No. 11/126)
Maldives The IMF staff report for the 2010 Article IV consultation with Maldives states that, as of January 24,
2011, Maldives continues to avail itself of the transitional provisions of Article XIV and has not yet
accepted the obligations of Article VIII, Sections 2, 3, and 4. It maintains an exchange restriction subject
to IMF approval under Article VIII, Sections 2(a) of the IMF’s Articles of Agreement, arising from the
Maldives Monetary Authority’s policy of rationing its supply of foreign exchange to commercial banks.
This rationing by a governmental agency has caused the channeling of foreign exchange transactions for
current international transactions to the parallel market where transactions take place at an exchange rate
that deviates by more than 2% from the official exchange rate. The more than 2% exchange rate spread gives
rise to a multiple currency practice subject to IMF approval under Article VIII, Section 3 and also to an
exchange restriction given the additional cost involved for obtaining foreign exchange. (Country Report No.
11/293)
Mongolia The IMF staff report for the Second Post-Program Monitoring states that, as of October 26, 2011,
Mongolia maintains two multiple currency practices subject to IMF jurisdiction. First, the modalities of the
multi-price auction system give rise to an multiple currency practice since there is no mechanism in place
that ensures that exchange rates of accepted bids at the multi-price auction do not deviate by more than 2%.
In addition, Mongolia has an official exchange rate (reference rate) that is mandatorily used for government
transactions (as opposed to the commercial market rate). Therefore, by way of official action, the authorities
have created a market segmentation. While the recently approved Order no. 699 of the Central Bank of
Mongolia sets forth that the reference rate is determined based on the weighted average of market rates used
from 4 p.m. of the previous day to 4 p.m. of the current day, the IMF staff is of the view that this order does
not eliminate the market segmentation and the multiplicity of effective rates arising from it. Accordingly,
in the absence of a mechanism to ensure that the commercial rates and the reference rate do not deviate by
more than 2%, the way the reference rate is used in government transaction gives rise to a multiple currency
practice subject to IMF approval. (Country Report No. 12/52)


Montenegro The IMF staff report for the 2011 Article IV consultation with the Republic of Montenegro states that, as of
April 15, 2011, Montenegro maintains an exchange system free of restrictions on the making of payments
and transfers for current international transactions, except with respect to pre-1992 blocked foreign
currency savings accounts and restrictions maintained for security purposes that have not been notified to
the IMF. (Country Report No. 11/100)
Mozambique No restrictions as reported in the latest IMF staff report as of December 31, 2011. The IMF staff report
for the Third Review under the Policy Support Instrument with the Republic of Mozambique states the
following as of November 21, 2011: On May 20, 2011, Mozambique accepted its obligations under Article
VIII, Sections 2, 3, and 4 of the IMF’s Articles of Agreement (EBD/11/34). A new foreign exchange law—
Foreign Exchange Law‖ Law No. 11/2009—came into effect on March 11, 2009. A new foreign exchange
regulation to implement the foreign exchange law—the Regulation for the Foreign Exchange Law (Decreto
No. 83/2010)—was issued on December 31, 2010. The Regulation, in conjunction with the implementing
norms subsequently issued by the Bank of Mozambique, fully removed the existing exchange restrictions
subject to Article VIII, Sections 2, 3, and 4 of the IMF’s Articles of Agreement. The two existing multiple
currency practices were also removed in March and April 2011, respectively, through the adoption of a
new regulation on the interbank exchange market and by discontinuing the previous multiple price foreign
exchange auction system, which in any case had not been used since 2009. (Country Report No. 11/350)
Myanmar The IMF staff report for the 2010 Article IV consultation with Myanmar states that, as of March 2, 2011,
Myanmar continues to avail itself of transitional arrangements under Article XIV, although it has eliminated
all Article XIV restrictions. Myanmar maintains exchange restrictions and multiple currency practices
subject to IMF approval under Article VIII arising from: (1) limits on the purchase of foreign exchange by
residents for foreign travel and by nonresidents for the remittable portion of wages, as well as for payments
and transfers relating to invisible and other current international transactions; and (2) the divergence
between the official exchange rate used for transactions of the public sector and the parallel market-
determined foreign exchange certificate rate.
Nepal The IMF staff report for the 2011 Article IV consultation with Nepal states that as of September 27, 2011,
Nepal removed an exchange restriction subject to Article VIII of the IMF’s Articles arising from quantitative
limits on the availability of foreign exchange for leisure travel abroad. The Industrial Enterprises Act places
a 75% limit on the conversion and transfer to foreign currency of salaries of nonresidents from countries
where convertible currency is in circulation. Since the limit applies to amounts that may be less than net
salaries, it gives rise to an exchange restriction under Article VIII. The IMF staff is investigating whether
this measure is also discriminatory. (Country Report No. 11/318) The restriction subject to Article VIII of
the IMF’s Articles arising from quantitative limits on the availability of foreign exchange for leisure travel
abroad was removed effective July 26, 2011.
Nigeria The IMF staff report for the 2010 Article IV consultation with Nigeria states that, as of January 28, 2011,
multiple prices are a technical characteristic of the central bank’s Dutch auction system and give rise to a
multiple currency practice. A comprehensive assessment by the IMF staff is needed to identify the extent of
remaining restrictions and multiple currency practices. (Country Report No. 11/57)
São Tomé and The IMF staff report for the First Review under the Three-Year Arrangement with São Tomé and Príncipe
Príncipe states that as of February 4, 2010, São Tomé and Príncipe maintained two measures subject to IMF
approval under Article VIII: (1) a multiple currency practice arising from the existence of multiple exchange
markets with multiple effective exchange rates for spot transactions with no mechanism to ensure that the
spreads among rates for spot transactions in these markets do not diverge by more than 2% at any given
time; and (2) an exchange restriction arising from Article 3(i) and Article 10(b) of the new investment code
regarding limitations on the transferability of net income from investment resulting from the requirement
that taxes and other obligations to the government have to be paid/fulfilled as a condition for transfer to the
extent it includes the payment of taxes and the fulfillment of obligations unrelated to the net income to be
transferred. (Country Rpt No. 10/100)
Serbia The IMF staff report on the 2010 Article IV Consultation and Third Review under the Stand-By
Arrangement and Financing Assurances states that, as of March 18, 2010, Serbia maintains a floating
exchange rate system free of restrictions on current international payments and transfers, except with respect
to blocked pre-1991 foreign currency savings accounts. (Country Report No. 10/93)

Table 9. Exchange Restrictions and/or Multiple Currency Practices by Country (concluded)

Serbia The IMF staff report on the 2010 Article IV Consultation and Third Review under the Stand-By
Arrangement and Financing Assurances states that, as of March 18, 2010, Serbia maintains a floating
exchange rate system free of restrictions on current international payments and transfers, except with respect
to blocked pre-1991 foreign currency savings accounts. (Country Report No. 10/93)
Sierra Leone The IMF staff report for the 2011 Second and Third Review under the Three-Year Arrangement under
Extended Credit Facility states that, as of November 21, 2011, Sierra Leone maintained one multiple
currency practice subject to IMF jurisdiction arising from the applied multiple price Dutch auction system,
as there is no formal mechanism in place to prevent spreads of effective rates between winning bids from
exceeding 2%. (Country Report No. 11/361)
Sudan The IMF staff report for the 2010 Article IV Consultation and First Review under the 2009–10 Staff-
Monitored Program with Sudan states that as of June 8, 2010, Sudan maintains an exchange restriction and
a multiple currency practice arising from the imposition of a 100% cash margin for letters of credit on most
imports and an exchange restriction arising from a limitation on the amount of foreign exchange purchases
for travel purposes. (Country Report No. 10/256)
Suriname The IMF staff report for the 2011 Article IV consultation with Suriname states that, as of April 18, 2011,
Suriname maintained multiple currency practices arising from the spread of more than 2% between
the buying and the selling rates in the official market for government transactions and also from the
possible spread of more than 2% between these official rates for government transactions and those in the
commercial markets that can take place within the established band. On January 20, 2011, the authorities
eliminated the existing multiple currency practice in the form of the special exchange rate for imports of
infant formula. (Country Report No. 11/256)
Swaziland The IMF staff report for the 2011 Article IV consultation with Swaziland states that, as of December 30,
2011, Swaziland maintained one exchange restriction subject to IMF approval under Article VIII. This
arises from a 50% limit on the provision for advance payments for the import of certain capital goods. In
November 2011, the central bank increased the limit from 33.33% to 50%. (Country Report No. 12/37).
Syria The IMF staff report for the 2009 Article IV Consultation with the Syrian Arab Republic states that, as of
February 12, 2010, Syria continued to maintain, under Article XIV, restrictions on payments and transfers
for current international transactions, including administrative allocation of foreign exchange. Syria also
maintained exchange measures that are subject to IMF approval under Article VIII: (1) prohibition against
purchases by private parties of foreign exchange from the banking system for some current international
transactions; (2) a multiple currency practice resulting from divergences of more than 2% between the
official exchange rate and officially recognized market exchange rates; (3) a non-interest-bearing advance
import deposit requirement of 75–100% for public sector imports; and (4) an exchange restriction arising
from the net debt under inoperative bilateral payments arrangements with the Islamic Republic of Iran and
Sri Lanka. (Country Report No. 10/86)
Tunisia The IMF staff report for the 2010 Article IV consultation with Tunisia states that, as of August 5, 2010,
Tunisia maintained a multiple currency practice resulting from honoring exchange rate guarantees extended
prior to August 1988 to development banks, which will automatically expire after maturity of existing
commitments (total loans covered by these guarantees amount to about US$20 million). (Country Report
No. 10/282)
Ukraine The IMF staff report for the Request for a Stand-By Arrangement and Cancellation of Current Arrangement
with Ukraine states that as of July 26, 2010, a number of new exchange controls were introduced in
October 2008, many of which were removed by May 2010. (Country Report No. 10/262)
Zambia The IMF staff report for the Sixth Review under the Three-Year Arrangement with Zambia states that, as of
June 7, 2011, Zambia maintained an exchange restriction shown by the accumulation of external payments
arrears, which is subject to IMF approval under Article VIII. (Country Report No. 11/196)
Zimbabwe The IMF staff report for the 2011 Article IV consultation with Zimbabwe states that, as of May 16, 2011,
apart from one remaining exchange restriction subject to IMF jurisdiction arising from unsettled balances
under an inoperative bilateral payments agreement with Malaysia, payments and transfers for current
international transactions may now be effected without restriction. (Country Report No. 11/135)
Source: IMF staff reports.
1 Includes 187 member countries and three territories: Aruba (Netherlands), Curaçao and Sint Maarten (Netherlands), and Hong Kong
SAR (China).
2 The measures described in this table are quoted from IMF staff reports issued as of December 31, 2011, and may have changed subse-
quently to the date when they were reported. The table does not include countries maintaining exchange restrictions or multiple currency
practices whose IMF staff reports are unpublished unless the authorities have consented to publication.

Regulatory Framework for Foreign Exchange Transactions

This section surveys the measures reported by member countries with respect to the regulatory framework
for foreign exchange transactions. This survey is divided into five major categories: trade-related measures,
current invisible transactions, accounts transactions, capital controls, and provisions specific to commercial
banks and institutional investors.
Trade-Related Measures
On balance, trade transactions were further liberalized between January 2011 and July 2012. Of the 138
trade-related measures reported by member countries, 74 were easing measures, 45 were tightening measures,
and 19 were neutral. Further liberalization of imports and import payments is the most noteworthy develop-
ment in this area. Exports are generally much less controlled than imports; nevertheless, there was significant
liberalization during the reporting period, in particular with respect to repatriation and surrender of export
proceeds.
Imports and import payments

IMF member countries reported 90 measures relating to imports and import payments (slightly more than
last year), of which 50 were easing measures and 29 were tightening measures. Import tariffs were generally
decreased, and importers were allowed greater flexibility in determining the timing of import payments.
There were relatively few reported measures that directly affect the flow of imports. In the easing direction,
Denmark and Italy abolished the licensing requirement for potassium chloride from Belarus. Guatemala
increased its quotas for certain duty-free products. The age limit on cars imported to Kosovo was raised from
8 years to 13 years and the age limit on car and motorcycle imports to Nigeria from 8 years to 15 years.
In the tightening direction, Belarus imposed licensing requirements on imports of malt beer from Ukraine
and imports of pedigree livestock. Malaysia extended until 2021 the sole right of an entity to import rice to
Malaysia, which has been in effect since 1996. Morocco imposed a pre-arrival import declaration for plywood,
veneered wood, and laminated wood from China.
Measures that reduce tariffs affect products, sources, or products from specific sources. Bolivia extended the
period of application for zero tariffs on sugar and diesel oil. Bolivia also implemented a five-year deferral of
tariffs on imports identified by the law on “community-based farm production revolution.” Guatemala and
Mexico reduced tariffs on a range of products. Maldives reduced tariffs for 112 items, while raising them
for 41 others. Moldova reduced tariffs on sugar, which were adopted as a safeguard measure; the tariffs were
subsequently allowed to expire. In contrast, in Pakistan, the tariff exemption expired on imports of plant
equipment and machinery for the establishment of businesses in designated areas, and Micronesia increased
tariffs on cigarettes.
Tariff measures pertaining to sources of imports were mainly in the easing direction. In keeping with pref-
erential tariff arrangements, Bolivia eliminated tariffs on products from participating countries, including
Argentina, Brazil, Chile, Cuba, Mexico, Paraguay, Uruguay, and Venezuela. Kosovo began to benefit from a
preferential agreement with the EU that runs through the end of 2015. In New Zealand, two international
agreements established a framework to ease conditions for imports from countries in the region. The ASEAN–
Australia–New Zealand Free Trade Agreement (AANZFTA) went into effect with respect to Cambodia, Lao
P.D.R., and Indonesia to remove, or reduce for eventual removal, tariffs on goods originating from ASEAN
member countries.17 Similarly, the New Zealand–Hong Kong, China Closer Economic Partnership will
result in the eventual reduction or removal of tariffs on goods originating from Hong Kong SAR. In contrast,
Mercosur countries (Argentina, Brazil, Paraguay, Uruguay) were authorized to increase import duties for cer-
tain extra-zone imports up to World Trade Organization consolidated rates. With respect to tariff measures
specifying products and sources, Kuwait imposed country-specific import prohibitions related mainly to food
and live animals.
17 Association of Southeast Asian Nations: Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore, and Thailand.

Virtually all measures pertaining to advance payments were easing measures. For example, the Philippines
now allows authorized dealers to sell foreign exchange for advance payments without central bank approval.
Serbia abolished the deadline of 180 days for customs clearance of prepaid imports; after one year, prepay-
ments for imports not realized are classified as cross-border credits to be recorded with the central bank. Fiji
increased the limit on import payments and permitted banks to approve the prepayment of term bills for
goods already landed and cleared by customs. India permitted authorized banks to offset export receivables
from and import payments due to the same entity abroad. South Africa and Swaziland raised the permitted
percentage of prepayment for capital goods. In contrast, Belarus prohibited advance payments for imports
using credits from Belarusian banks.
Two reported measures involved taxes. Ecuador raised its tax on financial transactions, including for import
payments. Moldova raised excise taxes on liquefied petroleum gas.
There were other noteworthy miscellaneous measures. Bangladesh raised the ceiling on the overall interest
cost of private sector imports on a usance basis. China implemented its foreign exchange import payment
verification and clearing system reform on a nationwide basis and simplified the foreign exchange import
payment approval process. In the Philippines, import financing of more than six months no longer needs to
be reported to the central bank and letters of credit may remain valid beyond one year.
Exports and export proceeds

During 2011–12, easing measures for exports and export proceeds well outnumbered tightening measures. Of
the 48 measures reported, 24 were easing measures, 16 were tightening measures, and 8 were neutral.
Some member countries restrict exports, mainly to ensure the adequacy of domestic supplies. Bolivia restored
the exportation of rice, beef, and corn, but authorized exports of given quantities of sugar on two separate
occasions. Moldova introduced a temporary ban on exports of domestic wheat, which was lifted after four
months. To increase domestic processing, Belarus prohibited exports of raw hides.
Several member countries adjusted their policy on the repatriation of export proceeds. For example, on the
easing side, Iceland extended the time limit for repatriation of proceeds from exports from two to three weeks.
India twice renewed the applicability of the extension of the repatriation period from 6 months to 12 months.
Nigeria extended the repatriation period from 90 days to 180 days for non-oil exports, and Serbia abolished
the deadline of 180 days for the repatriation of proceeds for exports of goods and services. On the tightening
side, Bhutan required export proceeds from India to be repatriated to the banking system within 91 days.
Indonesia required export proceeds to be repatriated to domestic foreign exchange banks, but with no obli-
gation to retain them in domestic banks and no restriction on their subsequent transfer abroad. Mauritania
required proceeds from exports and goods and services and income from foreign investment to be repatri-
ated within 90 days; half of such proceeds may be retained by an exporter in a domestic account or used to
repay foreign currency loans. It also required authorized dealers to keep fish export receipts deposited in their
accounts with the central bank. Sudan reduced the repatriation period from six months to three months for
nongold exports.
Mainly to increase the foreign exchange supply in the domestic banking system, two members tightened their
surrender policies for export proceeds. Argentina increased the export receipt surrender requirement for oil
and natural gas exporters from 30 percent to 100 percent and for mining companies from zero to 100 per-
cent. Barbados required foreign exchange dealers to surrender 5 percent of gross foreign exchange purchases.
Measures pertaining to export duties were mainly in the easing direction. For example, in Belarus, the export
duty rates for crude oil and certain categories of petroleum to countries outside the customs union with Russia
were aligned with rates in Russia, and Ecuador abolished the export tax on exports of private oil companies.
Guinea reduced the export duty on gold and diamonds. Pakistan exempted exports from certain areas from
export duties. In contrast, Vietnam imposed a 10 percent levy on gold exports.
With respect to export financing, two members reported easing measures. Colombia lifted the requirement
that export financing with maturities of more than 12 months must be reported to the central bank. Malaysia
raised the limit on foreign currency trade financing that may be obtained by residents from nonresidents.

Export procedures were also simplified and updated to enhance trade in goods. Kazakhstan no longer includes
transaction passports as one of the documents required for customs clearance. (Previously, a transaction
passport completed by the authorized bank servicing the transaction was used to monitor repatriation of
export exchange proceeds exceeding a certain amount.) Kosovo restored reciprocity with Serbia and Bosnia
and Herzegovina; the latter’s acceptance of Kosovo customs seals facilitates transit of exports from Kosovo.
Honduras and Nicaragua were integrated into the electronic data exchange system already in place between
El Salvador and Guatemala.
Current Invisible Transactions

This category covers nontrade payments and transfers that are included in the current account of the balance
of payments, such as income from investment (e.g., profits, dividends, and interest), payments for travel,
education expenses, the cost of medical treatment abroad, subscription and membership fees, and transfers
of nonresident workers’ wages and salaries. In the period under review, measures pertaining to payments
for invisible transactions and current transfers numbered 40, of which 30 were easing measures and 9 were
tightening measures. Measures pertaining to proceeds from invisible transactions numbered 5, of which 3
were easing measures.
Payments
A number of IMF member countries eased controls on payments related to travel. For example, India eased
controls for travel by relatives for medical treatment; Fiji for airline ticket sales; and Myanmar, Nepal, Slovak
Republic, and South Africa for travel allowances. Other countries eased limitations on payments for medical
expenses (Fiji, Morocco), educational expenses (Fiji), alimony and court-ordered payments (Fiji), and software
license fees (India). Bangladesh permitted the use of credit cards for payments of membership fees in profes-
sional and scientific institutions and fees related to applications for admission to foreign institutions. Bulgaria
raised the threshold at which payments require documentation. Morocco permitted repayment of credit
card debts incurred by Moroccans previously residing abroad. As part of its foreign exchange system reform,
Mozambique replaced prior approval with registration for current payments. The Philippines eliminated prior
approval of payments for charters and leases of foreign-owned equipment, refunds of unused foreign grants
or loans, payments for underwriting and broker fees, and settlements of deposit insurance claims. South
Africa raised the limit on miscellaneous payments to nonresidents. Ukraine increased the amount of foreign
exchange that residents may purchase daily, and Tonga raised the amount below which authorized dealers may
approve payments for current transactions except travel.
With respect to tightening measures, Argentina stemmed capital outflows by imposing a verification program
for foreign exchange sales to residents for certain tourism and travel transactions. Argentina now also requires
prior approval for payments for professional and technical services and for use of patents and trademarks when
transactions are between related entities or when the beneficiary is a resident of a jurisdiction considered a
tax haven. Belarus prohibited advance import payments using funds borrowed from Belarusian banks. Brazil
increased the financial transactions tax on credit card expenditures abroad, and Ecuador raised the tax levied
on transfers abroad.
Proceeds
Bangladesh permitted authorized dealers to arrange for payment for small-value service exports up to a given
limit per instance. Both Iceland and Nigeria extended the repatriation period for proceeds from certain
invisibles.
In contrast, Bangladesh subjected proceeds from business process outsourcing to a retention quota of 50
percent of the repatriated foreign exchange. To increase international reserves, Barbados required authorized
foreign exchange dealers to surrender 5 percent of gross foreign exchange purchases to the central bank.

Account Transactions
The changes reported by IMF members in regulations for resident and nonresident accounts were largely in
the direction of liberalization, continuing a trend also observed the previous year. The overwhelming major-
ity of the measures introduced since January 2011 were easing measures—22 of 25 measures pertaining to
resident accounts, and 11 of 16 measures pertaining to nonresident accounts. In a related area, regulations on
residents’ opening and maintaining foreign exchange accounts were also eased. Some members relaxed con-
trols on residents’ domestic and foreign currency accounts abroad in the process of liberalizing their financial
accounts.
Resident accounts
Most of the easing measures relating to resident accounts referred to resident accounts in the home country.
For example, Bhutan permitted resident earners of foreign exchange and nonresident Bhutan citizens to have
foreign exchange accounts in Bhutan. Guinea cancelled a 1.25 percent commission on cash withdrawals. To
increase the depth of their foreign exchange markets, Honduras permitted financial institutions to accept
Canadian dollar deposits and India authorized financial institutions to accept any freely convertible currency.
India and Malaysia permitted joint accounts of nonresident and resident individuals who are close relatives.
Latvia permitted the partial deposit freeze on Parex Bank to expire. Sri Lanka allowed expatriate employees
to deposit their salaries in foreign exchange accounts. As part of the ongoing efforts to unify the exchange
rates and the foreign exchange markets, Myanmar eliminated the balancing requirement specifying that
import payments be made out of export earnings and permitted withdrawals in foreign exchange cash up to
US$10,000.
Three countries liberalized the opening and maintenance of resident accounts abroad. As a further step
toward internationalizing the renminbi, China extended nationwide a pilot program to allow export proceeds
of domestic enterprises to be deposited abroad. India permitted residents with overseas direct investments to
open foreign exchange accounts abroad. The former Yugoslav Republic of Macedonia allowed residents that
acquired rights to foreign currency abroad (e.g., pensions) and nonresident Macedonian citizens to maintain
foreign currency accounts abroad.
Regulations on resident accounts were tightened in only two cases. To contain demand for foreign exchange,
Argentina required that withdrawals of foreign currency from ATMs abroad be debited against foreign cur-
rency accounts at home and Iran revoked the rule that enabled residents to purchase up to US$1,000 or its
equivalent in euros to open a foreign exchange account.
Nonresident accounts
The liberalization of nonresident accounts related mainly to specific types of deposits or sources of funds. For
example, India permitted the deposit of proceeds from the sale of foreign direct investment into domestic or
foreign currency accounts. Sri Lanka authorized the deposit of resident payments for purchases of real estate
in Sri Lanka from nonresidents. Tunisia permitted nonresident individuals of Libyan nationality to open con-
vertible Tunisian dinar and foreign currency accounts. Ukraine allowed nonresident investors to credit foreign
currency investment accounts with foreign currency cash and with the proceeds of complete or partial liquida-
tion of investments in Ukraine. In another type of easing measure, Sudan allowed banks to determine cash
withdrawal limits in accordance with respective bank policies, and Croatia revoked the decision governing
the opening and management of nonresident bank accounts, leaving these matters to the discretion of banks.
With respect to tightening measures, Bhutan discontinued domestic currency accounts of nonresident for-
eigners working or residing in or outside Bhutan, mainly in border areas.
Capital Controls
The overall trend toward liberalization of capital transactions masks two major underlying developments:
continued liberalization by many countries that are in the process of opening up their financial account, and
adjustments in capital controls in response to changes in the global environment, especially in capital flows to

emerging market economies. Net inflows to emerging market economies peaked in early 2011, mainly driven
by portfolio and bank flows, as reflected in the fact that the largest group of new measures affected capital
and money market instruments. The second largest group of measures consisted of adjustments to controls
on credit operations. A weakened global economic outlook and heightened risk aversion slowed net inflows
to emerging market economies during the second half of 2011, and some emerging market economies also
experienced net outflows that likely triggered an intensified effort to ease inflow controls to address concerns
about the reduced access to foreign funds. Net inflows to emerging market economies recovered in the first
half of 2012.
Between January 2011 and July 2012, IMF member countries reported 164 measures relating to capital
controls, compared with 147 measures during the analogous period the previous year. Of these 164 mea-
sures, 102 (nearly two-thirds) were easing measures, about the same proportion as the previous year. Of the
remaining measures, 49 were tightening measures and 13 were neutral. Although tightening measures almost
equally affected capital inflows and outflows, measures that affected controls on capital inflows were mostly
eased, partly because there was a rollback of previously introduced limitations on capital inflows and partly
because of the continuing trend toward liberalization of capital flows. The easing of inflow controls was most
pronounced during the second half of 2011, with some further easing in the first half of 2012, most likely in
response to the decrease and partial reversal of capital inflows to emerging market economies. Neutral mea-
sures typically encompassed changes in institutional frameworks and in procedures.
Repatriation and surrender requirements

Only a few member countries adjusted repatriation and surrender requirements with respect to capital trans-
actions. With respect to easing measures, Iceland increased the time limit for the repatriation of proceeds
from capital transactions from two to three weeks. The Philippines lifted the repatriation and conversion
requirements for proceeds from dividends, profits, and the divestment of direct investments or investments
in securities abroad. In contrast, Barbados required authorized foreign exchange dealers to surrender 5 percent
of their gross foreign exchange services to the central bank. Argentina reduced to 30 days the repatriation
period for proceeds from the settlement of financial debts and issuance of securities abroad. Further, India
required the proceeds from external commercial borrowing for rupee expenditures in India to be immediately
credited to rupee accounts. Indonesia now requires that proceeds from offshore debt issuance be received
through domestic banks, though without an obligation to keep the funds in such banks or to convert them
to domestic currency.
Controls on capital and money market instruments

Controls on capital and money market transactions were generally in the easing direction, with the imple-
mentation of four times more easing measures than tightening measures. This contrasts with the previous
year, when easing was less pronounced, probably because of members’ concerns about surges in portfolio
capital inflows during 2010. Measures affecting controls on inflows (37) significantly outnumbered measures
on outflows (10).
Among the few changes on capital outflows, measures allowing increased access by residents to foreign assets
were dominant. Oman permitted licensed local banks to market foreign investment products without central
bank approval. Serbia further liberalized residents’ portfolio investments abroad by allowing investments in
long-term debt securities by specific investors. Continuing the gradual liberalization of outward capital trans-
actions, South Africa raised the limit on offshore investments by individuals. Sri Lanka also raised the limits
on investment in shares issued by foreign companies and in sovereign bonds and allowed nonresident entities
and individuals to sell units in licensed unit trusts.
The majority of the measures eased controls on inflows. To increase nonresidents’ investments in Indian
securities, India raised the limits on nonresidents’ investments in government bonds, in rupee and foreign-
currency-denominated bonds issued by infrastructure debt funds and mutual fund shares. Following steps to
increase the rate and coverage of the tax on foreign exchange inflows, Brazil rolled back some of the measures
during the latter part of the reporting period when capital flow pressures decreased. China permitted qualified
foreign financial institutions to invest in domestic securities in renminbi as part of the renminbi’s interna-

tionalization. Nigeria authorized nonresidents to purchase government securities with maturities of less than
one year. Sri Lanka allowed foreign investors to purchase shares of local companies and removed the ceiling
on interest rates on debentures.
Tightening measures were mainly directed toward improving the composition or reducing the volume of
portfolio inflows. For example, to contain capital inflows in short-term central bank securities, Indonesia
lengthened the minimum holding period for central bank certificates from one month to six months. Pakistan
set a withholding tax on securities, with one rate for maturities between 6 and 12 months and a higher rate
for maturities of less than 6 months and increased the latter. Paraguay prohibited the sale of domestic shares
to entities operating in locales considered tax havens.
There were noteworthy developments in the institutional framework for securities. Cambodia established a
stock market in 2011 and, in early 2012, secondary trading commenced. Moldova set criteria for determina-
tion of the price of minority shares when they are to be bought by majority shareholders.
Controls on derivatives and other instruments

Liberalization was less marked in derivative transactions, likely reflecting lessons from the financial crisis.
Only a few countries reported changes, and there were almost the same number of tightening as easing
measures. New regulatory frameworks for derivatives went into effect in India and Serbia to facilitate such
operations. Subsequently, India removed the quantitative limit on swap transactions by authorized dealers but
introduced new rules, including a requirement that forward contracts entered into under certain facilities be
fully deliverable.
Elsewhere, tightening measures were imposed in part for financial stability reasons. For example, Israel
adopted a 10 percent reserve requirement and strengthened reporting requirements on foreign currency swap
and forward transactions. Lebanon prohibited derivative transactions with nonresident entities that do not
meet certain rating requirements. Peru extended the application of a 30 percent income tax on short-term
(i.e., less than 60 days) gains by nonresidents in derivative transactions with residents. In Sri Lanka, forward
contracts between authorized dealers and clients were limited to a maximum period of 90 days.
Controls on credit operations

Controls on cross-border lending were mostly relaxed, in particular during the second half of the reporting
period in response to diminishing capital inflows. Among the measures pertaining to credit operations, 17
involved easing, 12 involved tightening, and 1 measure is considered neutral.
Easing measures mainly affected external borrowing, with only a few countries relaxing controls on lending
to nonresidents. For example, in Colombia, the reporting requirements were dropped for export financ-
ing, export advances, and import financing with maturities under the limits set by the central bank. Also,
Colombia now permits any nonresident to make loans to residents; previously, only financial institutions
could do so. India raised the all-in-cost ceiling for longer-term external borrowing and eased commercial bor-
rowing by the infrastructure sector, importers of capital goods, and nongovernmental organizations engaged
in microfinance. Malaysia permitted borrowing in ringgit from nonresident, nonbank, related institutions.
South Africa allowed the raising and deployment of capital abroad without exchange control approval for
qualifying internationally headquartered companies. Sri Lanka permitted students abroad to borrow from
foreign banks and to repay such borrowing through an authorized dealer in Sri Lanka. Tajikistan replaced the
approval requirement with an ex ante registration or ex post notification framework for credits to and from
nonresidents.
With respect to tightening measures, Brazil progressively increased the maximum maturity covered by the
6 percent financial transactions tax up to 1,800 days mainly to discourage short-term capital inflows, and
partially reversed course as pressures abated. At the same time, the tax was reduced to zero for certain types of
borrowing abroad. Iceland prohibited the purchase of foreign currency for repayment of loan principal and
the value of indexation on bond principal to prevent the circumvention of its capital controls. Iceland also
rescinded the exemption granted to bank resolution committees and bank winding-up committees to pur-

chase foreign exchange to reduce potential pressure in the foreign exchange market. India tightened the con-
ditions for refinancing external commercial borrowing and foreign currency convertible bonds. In Vietnam,
external loan contracts became subject to approval by the line ministry and by the ministry of finance.
The one reported neutral measure was implemented in Lithuania, where the authority to approve certain
investments by insurance companies abroad was transferred from a supervisory agency to the central bank.
Controls on direct investment

The liberalization trend is most pronounced in foreign direct investment. As in previous years, virtually all
the reported measures relating to outward and inward direct investment were of an easing nature. Members
generally relaxed the conditions for outgoing direct investment. For example, Fiji lifted the suspension of
individual and corporate investment. Malaysian companies that met prudential requirements were allowed
to make direct investments without limit. South Africa permitted companies to make investments unrelated
to current businesses and lifted restrictions on additional working capital for existing businesses. Sri Lanka
permitted the acquisition of shares in foreign companies up to certain limits and eased payments for setting
up and maintaining existing places or business.
With respect to inward direct investments, screening procedures and sectoral restrictions were mostly relaxed.
Australia, Mexico, and New Zealand raised the threshold above which investments are subject to review.
China permitted the use of renminbi acquired abroad for direct investment. India permitted the transfer with-
out central bank approval of shares from nonresidents to residents and 100 percent ownership in greenfield
(i.e., new) investments in pharmaceuticals. Russia permitted foreign investment by international organiza-
tions in strategic sectors (i.e., nuclear energy, aerospace technology, and armaments). Fiji delegated approval
of investments on securities traded in the South Pacific Exchange to authorized dealers. In contrast, New
Zealand added two further considerations in assessing whether foreign acquisition of land was of benefit to
New Zealand.
Rules on the transfer of proceeds from direct investment in Argentina were tightened; investors were required
to provide proof that the funds involved in the investment were brought in through the Argentine foreign
exchange market. In contrast, Ukraine rolled back the controls that were implemented at the beginning of the
crisis by abolishing the requirement of a five-day deposit in domestic banks of proceeds of direct investment
prior to transmission abroad.
Controls on real estate transactions

The direction of changes in controls on real estate transactions was mixed. To comply with their obligations in
the EU, the Czech Republic liberalized the acquisition of agricultural land and Estonia abolished restrictions
on ownership of agricultural land and forest land up to 10 hectares for all residents of member countries of
the European Economic Area and Organization for Economic Cooperation and Development. In contrast,
Latvia and Lithuania postponed liberalizing the acquisition of agricultural land and forest land by three years
until 2014. On purchases by residents abroad, as part of its overall outflow liberalization strategy, South Africa
raised the threshold below which such purchases would not require tax certification. In a bid to contain a
real estate price bubble, Singapore imposed additional stamp duties on purchases by foreigners and corporate
entities of residential properties in Singapore and on purchases by residents of properties abroad.
Controls on personal transactions

Of the reported 16 changes in controls on personal transactions, 12 were in the easing direction. Regulations
on inward and outward lending and gifts were relaxed. For example, India permitted residents to make loans
in rupees to nonresident close relatives in the form of crossed checks or electronic transfers and to make repay-
ments through deposits into rupee accounts. Morocco permitted residents to make loans to foreign personnel
employed by diplomatic missions and international organizations. India raised the value of gifts that could be
given in the form of securities, and Nepal raised the maximum allowable gift.

With respect to access to foreign exchange, Ukraine nearly doubled the amount of foreign exchange that can
be purchased daily by an individual. The only tightening measure reported in the category of personal trans-
actions was Ukraine’s elimination of the exemption of foreign exchange purchases below a certain threshold
from the requirements of identification and proof of residency.
Provisions Specific to Commercial Banks and Institutional Investors

This section reviews developments in provisions specific to commercial banks and institutional investors, with
a focus on prudential measures that are in the nature of capital controls.18 The category Provisions Specific
to the Financial Sector covers monetary and prudential measures in addition to foreign exchange controls.19
It includes, among other categories of financial institutions’ transactions, borrowing abroad, lending to non-
residents, purchase of locally issued securities denominated in foreign exchange, and regulations pertaining to
banks’ and institutional investors’ investments. These provisions may be similar or identical to the measures
described in the respective categories of controls on capital and money market instruments, credit operations,
and direct investments, if the same regulations apply to commercial banks or institutional investors as to other
residents. In such cases, the measure also appears in the relevant category in the section Capital Transactions.
Some of the measures included in this section may be considered capital flow management measures (CFMs)
as defined by a recent IMF policy paper.20 CFMs are designed to influence capital flows and encompass a
broad spectrum of measures. They include capital controls, defined as measures that discriminate in the con-
duct of capital transactions based on the residency of the person conducting the transaction or of the asset
and other measures.21 The latter include measures that are often considered prudential for example, measures
that treat transactions differently based on their currency denomination. However, only a portion of the mea-
sures in this section can be considered CFMs either because they are capital controls or, in the case of some
prudential-type measures, because they were designed to influence capital flows.
The changes made by various countries in their financial sector regulations during 2011 and early 2012 can be
seen as part of broader efforts to strengthen the financial regulatory framework, including by drawing on les-
sons learned from the financial crisis and concerns about capital flow volatility. Following the trend observed
in the previous reporting period, most of the measures introduced in 2011 and in early 2012 (close to 60
percent) tightened regulation of the financial sector. Slightly more than two-thirds of the reported changes
are considered prudential measures (158). The number of capital controls (48) is significantly lower than the
corresponding number during the previous reporting period (86), with the majority serving to tighten exist-
ing norms except with respect to institutional investors, for which easing measures slightly exceed tightening
measures. The reported changes mainly affect banks and other financial institutions, with only one-quarter
of the measures introducing changes with respect to the regulatory framework for institutional investors.
The number of measures considered neutral increased from the previous reporting period, reflecting among
other things intensified work to consolidate and update existing regulations and changes in the institutional
framework. The principal changes in this category are presented in Table 10.
The tightening of the regulatory framework concerning banks and other credit institutions that started in the
second half of 2009 continued in 2011 and early 2012. Almost two-thirds of the reported measures that are
not considered capital controls strengthened existing regulations. In contrast to previous years, most capital
controls also tightened existing rules.
18 Capital controls and prudential measures are highly intertwined because of their overlapping application. For example, some
prudential measures (e.g., different reserve requirements for deposit accounts held by residents and nonresidents) also can be
regarded as capital controls because they distinguish between transactions with residents and nonresidents and hence influence
capital flows.
19 Inclusion of an entry in this category does not necessarily indicate that the aim of the measure is to control the flow of capital.
20 See IMF (2011 and 2012).
21 The concept of capital controls in the AREAER is quite similar; it encompasses regulations that influence capital flows and
includes various measures that regulate the conclusion or execution of transactions and transfers and the holding of assets in the
country by nonresidents and abroad by residents.

Table 10. Provisions Specific to the Financial Sector

Prudential Measures Capital Controls Total
Tight- Tight- Tight-
ening Easing Neutral ening Easing Neutral ening Easing Neutral Total
Provisions specific to
commercial banks and
other credit institutions 86 28 24 19 13 0 105 41 24 170
Provisions specific to
institutional investors 9 0 11 6 9 1 15 9 12 36
Total 95 28 35 25 22 1 120 50 36 206

•• A noteworthy development is that several European countries (among them advanced economies) intro-
duced regulations to strengthen the prudential framework of bank operations (Austria, Bulgaria, Italy,
Kazakhstan, Romania, San Marino, Serbia). Some of these changes harmonized domestic financial regula-
tions with the respective EU directives or aimed at reducing the risks of banking operations by adjusting
regulatory limits, increasing liquidity buffers, or strengthening host-home supervisory cooperation (Austria,
Italy, Romania, San Marino). Serbia harmonized its financial regulations with Basel II standards and
adjusted loan classification and provisioning rules. The loan-to-value ratio on forint-denominated loans
was raised in Hungary to tighten credit conditions. Minimum capital requirements were increased in the
Philippines and, as part of a broader reform of the financial sector regulatory framework, in Moldova.
The new financial regulations adopted in Kazakhstan aim at reducing risks in the operation of banks and
financial organizations. In a bid to increase the share of account transactions and transfers in domestic
and cross-border payments, limitations on cash payments exceeding a certain threshold were adopted in
Bulgaria. Some of the measures adopted in the reporting period enhance anti-money-laundering regulations
(Argentina, Austria, Moldova). In Suriname, the Bank Supervision Law was enacted, considerably strength-
ening the regulatory regime and supervisory powers of the Central Bank of Suriname.
•• Among the easing measures, India advanced its financial sector reform agenda by significantly easing con-
trols on interest rates of certain resident and nonresident deposits. A significant part of the prudential easing
measures affected reserve requirements on local or foreign currency liabilities, as discussed below.
•• In contrast to the previous year, the framework for commercial banks’ foreign exchange risk management
was overwhelmingly tightened, which likely reflected concerns about the risks related to increased vari-
ability in the foreign exchange markets. Foreign exchange exposure limits, which are often imposed in an
asymmetric manner, have been lowered in Kenya, Mauritius, Nigeria, and Ukraine with a view to reduc-
ing banks’ foreign exchange risk and their ability to take a position against the currency.22 In Brazil, the
limit above which banks are required to maintain 60 percent reserves of short positions has been lowered.
To align its domestic regulations with international practice, Latvia and Ukraine allowed inclusion of off-
balance-sheet items in the calculation of banks’ open foreign exchange position.23 To reduce banks’ foreign
exchange exposure through leveraged operations, Peru introduced limits on banks’ foreign exchange deriva-
tive contracts as a percentage of capital, and Korea tightened a similar limit introduced in 2010. Hungary
introduced a foreign exchange funding adequacy ratio to manage the maturity mismatch of banks’ on-
balance-sheet and off-balance-sheet foreign exchange positions. With the stabilization of financial markets,
Paraguay reversed its tightening off the limit on banks’ long foreign exchange position (introduced during
the financial crisis). Armenia switched from regulating banks’ long foreign exchange positions to regulating
the more standard net position limits, allowing banks more flexibility to manage their exchange rate risks.
22 Asymmetric open foreign exchange position limits are often considered capital controls since they have the effect of influ-
encing capital flows.
23 Ukraine’s domestic regulations on banks’ open foreign exchange positions are not yet fully in line with best international
practice because they exclude loan loss provisions on foreign currency loans from calculating the net open positions.

•• Concerned about the systemic risk posed by banks’ unhedged foreign currency lending to residents, sev-
eral countries adjusted their regulatory frameworks (Belarus, Hungary, Romania, Korea, Serbia, Ukraine,
Vietnam). The measures range from prohibitions on foreign exchange consumer lending (Belarus,
Ukraine), lower loan-to-value and debt-to-income ratios (Romania), and prohibitions on bank purchases of
foreign-exchange-denominated bonds issued for won financing (Korea), and a minimum earning require-
ment and proof that debtors have sufficient income in foreign exchange (Hungary). As a transitional mea-
sure, mortgages in foreign exchange were not allowed to be registered in the land registry in Hungary for
a few months until the new regulations on foreign exchange mortgage lending to households were issued.
Capital control measures pertaining to banks and other credit institutions include somewhat more tightening
measures (19) than easing measures (13), indicating that nondiscriminatory prudential measures may not
have been sufficient to deal with the financial stability concerns in some countries.
•• The regulatory framework for external borrowing was strengthened by raising the tax on transactions
(Brazil) or by requiring approval of loans or bond issuances abroad (Vietnam). When pressure in the foreign
exchange market from capital inflows subsequently eased, Brazil reduced the tax rate on longer maturities in
2012. Taxes on financial transactions were extended in Bolivia until April 2012. Several countries tightened
reserve requirements differentiated according to the residency of the deposit holder as well as asymmetric
foreign exchange exposure limits (Costa Rica, Russia, Ukraine). Indonesia reinstated the limit on the daily
balance of banks’ short-term external debt at 30 percent. Latvia introduced a capital charge on banks whose
credit exposure to nonresidents exceeds 5 percent of total assets and/or whose nonresident deposits exceed
20 percent of total assets. Banks’ derivative transactions became subject to reserve and reporting require-
ments in Israel.
•• The majority of the measures easing controls involve credit transactions with nonresidents and residency-
based reserve requirements (Angola, Namibia, Peru, Ukraine). India increased the interest rate ceiling on
nonresident foreign exchange deposits. Ukraine, as part of the process of rolling back temporary measures
introduced during the financial crisis, removed the prohibition against repayment of foreign exchange loans
that have not been converted into local currency. Regulations for derivative transactions were eased in Fiji,
where authorized banks were permitted to write net forward sales contracts up to F$20 million, and in
Malaysia, where resident banks were allowed to enter into ringgit-denominated derivatives.
Reserve requirements have been increasingly used to achieve financial stability objectives and respond to
changes in capital inflows. More than one-third of the measures introduced in 2011 and early 2012 in the
banking sector affect reserve requirements. Twenty countries reported adjusting their reserve requirements
in line with monetary and financial stability objectives. Indicating concerns about monetary management
against the backdrop of volatile capital flows, close to one-half the tightening measures introduced in the
financial sector involved some sort of increased reserve requirements (47), the majority of which were intro-
duced in the first half of 2011.
Depending on the policy objective, reserve requirement ratios are often differentiated according to maturity
(e.g., Korea, Paraguay, Peru, Serbia, Turkey, Vietnam), the denomination of the liability, or residency of the
depositor/lender, with the latter considered capital controls. Most countries that reported adjusting the reserve
requirement during 2011–12 apply different reserve ratios to domestic and foreign currency liabilities, but
only a few set different rates based on the residency of the depositor (e.g., Costa Rica, Peru, Russia).
•• To create a macroprudential liquidity buffer in case of external shocks, several countries increased dif-
ferentiated reserve requirements on local and foreign currency liabilities, imposing higher rates on foreign
exchange liabilities (Bolivia, Georgia, Indonesia, Paraguay, Peru, Suriname, Uruguay).
•• Against the backdrop of volatile capital inflows and inflation concerns, Turkey actively used the reserve
requirement in response to changing external and domestic monetary conditions; following a tightening
cycle at the beginning of 2011, reserve requirements on both local and foreign currency liabilities were
gradually decreased in a differentiated manner, across maturities. Uruguay introduced a marginal reserve
requirement on both local and foreign currency liabilities, which is remunerated, albeit marginal reserves
in peso are remunerated at a lower rate than regular required reserves.

•• Amid persistently high inflation expectations and with a view to preparing for an influx of capital, Russia
set a higher reserve ratio on nonresidents’ liabilities in February 2011 and further increased it in two steps
before April 2011.
•• In contrast, in response to changing liquidity conditions, Angola, India, Turkey, and Yemen decreased their
reserve requirements. In Georgia, longer maturities in local and foreign currency became exempt from the
reserve requirements (maturities over one year for local currency and over two years for foreign currency).
•• To boost demand for local currency (and reduce dollarization), Armenia increasingly set reserve require-
ments on foreign currency deposits in local currency. Such a shift in the denomination of required reserves
usually also has a one-time effect of increasing the supply of foreign exchange in the foreign exchange mar-
ket. Turkey allowed maintaining an increasing share of the required reserves in foreign exchange to boost
CBT reserves. Adjustments in the remuneration of the required reserves and their local currency or foreign
currency component have also been used to influence financial institutions’ decisions on the denomination
of their assets and liabilities (Albania, Croatia, Seychelles).
A tightening of prudential measures and an easing of capital controls with respect to institutional investors
also reflect the ongoing liberalization efforts of some member countries and the continued enhancement of
the regulatory framework for institutional investors. Sixteen member countries reported 20 changes in pru-
dential measures and somewhat fewer (16) changes in capital controls—almost the same numbers as in the
previous reporting period.
•• Nine easing measures were implemented during the reporting period, all of which relaxed capital con-
trols. Most of the measures increased investment opportunities abroad for institutional investors (Bolivia,
Chile, Namibia, Peru, Romania, Serbia). South Africa, continuing the gradual liberalization of its financial
account, allowed resident institutional investors to purchase securities that are registered in the local stock
exchange.
•• Nine reported measures tightened the prudential framework for institutional investors’ operations to
enhance the stability of the financial system. Most of these implemented stricter conditions on institu-
tional investors’ investments abroad. Stricter prudential limits on institutional investors’ foreign exchange
and liquidity position were introduced in Armenia, Colombia, Estonia, and Malawi. Kazakhstan adopted
new regulations to limit the risks in financial institutions’ operations. Armenia and the former Yugoslav
Republic of Macedonia introduced new prudential standards for insurance companies and pension funds,
respectively. In light of further stabilization in the financial sector, Serbia continued reversing earlier pru-
dential easing with respect to insurance companies.
•• Tighter capital controls relate exclusively to institutional investors’ investments, imposing stricter condi-
tions or limits on the investment of pension funds and insurance companies abroad. These measures are
considered capital controls because they discriminate against investment in foreign assets by forbidding,
or setting lower limits on, institutional investors’ investments abroad than on similar investments locally.
Facing sustained capital outflows and significant depreciation pressure, Argentina barred local insurance
companies from holding investments abroad and required primary insurers to repatriate their offshore
funds and investment holdings by the end of 2011. Previously, local insurance companies were allowed to
hold up to 50 percent of their investments and funds abroad. Armenia tightened the conditions for pension
funds’ and investment funds’ investments abroad. The former Yugoslav Republic of Macedonia imposed
new limits on insurance companies’ foreign investments.
Several of the reported changes in provisions specific to the financial sector are recorded as neutral (36).
These changes cannot be linked directly to an easing or tightening of rules, but reflect mainly institutional
or procedural changes. New laws were adopted and existing regulations consolidated in Armenia, Bulgaria,
and Colombia. In Lithuania, a shift of supervisory responsibilities to the Bank of Lithuania required some
regulation changes. Extensive regulatory changes were implemented in Moldova and San Marino that affected
various institutions in the financial sector. Adopting International Financial Reporting Standards accounting
standards triggered some regulatory changes in Moldova and Romania. Finally, some EU member countries
(Austria, Bulgaria) adopted EU directives on payment systems and electronic payments.

Special Topic
Effects of Capital Flow Liberalization: What Is the Evidence from Recent

Experience in Emerging Market Economies?
This special topic is based on recent IMF research into the experience of emerging market economies that
have liberalized capital flows over the past 15 years, in particular, the impact of liberalization on macroeco-
nomic performance and financial stability.24 The research indicates that greater openness to capital flows is
associated with higher growth, increased gross capital flows, and higher equity returns and with lower inflation
and reduced bank capital adequacy ratios. The effects vary depending on thresholds.
This study focuses on the short- to medium-term effects of liberalizing capital flows on macroeconomic
performance and risks to financial stability. Specifically, it analyzes the effects of liberalizing capital flows
on economic growth; inflation; capital inflows, outflows, and net flows; equity returns; and bank capital
adequacy ratios. The sample of countries and the econometric strategy have been selected to capture the
short- to medium-term effects. The sample is therefore limited to 37 countries that liberalized capital flows
during 1995–2010.25 Dynamic panel data specifications are used to capture the possibility of partial adjust-
ment toward the steady state. The relatively short time dimension can be considered as the transition period
between restricted and liberalized capital flows.
This study uses two new de jure measures of capital flow liberalization. The de jure measures are restrictive-
ness indices based on the AREAER, and are computed for 185 countries during 1995–2010. Higher values
indicate more controls.
•• The first de jure restrictiveness index of capital flows is similar to the Schindler index (Schindler, 2009).26
The restrictiveness index is based on the AREAER and comprises 21 categories of restrictions, including
restrictions on equity, bond, money market, and collective investment instruments; financial credit; and
direct investment by direction. The index distinguishes between inflows (nonresidents’ investments in the
country) and outflows (residents’ investments abroad). For each of the 21 categories a restrictiveness index
was calculated for inflows, outflows, and overall flows (narrow index). The difference between the Schindler
index and the narrow restrictiveness index is that the former includes a limited qualitative assessment of
controls. For example, if a measure requires only notification of the transaction, the control covers only a
few sectors of the economy, or the control is maintained for anti-money-laundering or security reasons, the
Schindler index does not consider the transaction controlled. However, the differences between the two
indices are minor, and for the period of the availability of the Schindler index, the correlation between the
two indices is more than 0.92.
•• As a robustness check, a second de jure index was also used, which is an average of binary indicators of
restrictiveness in 62 categories of capital transactions. The categories include all capital transactions, foreign
exchange and domestic currency accounts of residents and nonresidents, regulatory measures related to the
financial sector, and repatriation and surrender requirements. This broad restrictiveness index can have a
value between zero and 1, and higher values represent more restricted cross-border capital flows. Due to
its more extensive coverage, this index can measure liberalization or reversal of liberalization better than
narrower indicators. The correlation between the narrow index and the broader index is 0.92 for the 185
24 Saadi-Sedik and Sun (forthcoming).

25 There is a structural break in AREAER data in 1995. Until 1995, the AREAER summarized a country’s openness to capital
flows using a binary dummy variable, where 1 represented a restricted capital account and zero represented an unrestricted capital
account. Since 1995, the AREAER has utilized a more structured approach, providing detailed information on restrictions on
capital transactions in a number of subcategories.
26 The Schindler index is available only for 91 countries from 1995 to 2005.

countries and 0.90 for the sample used in the empirical part of this paper. The two indices are also highly
correlated with other available de jure indices.27 The broader index was computed only for aggregate capital
flow restrictiveness.
The de jure index is used to identify the sample of countries that have liberalized over the past 15 years. First,
only those countries are retained that have liberalized by at least 0.1 point according to the index between
1995 and 2010. Second, for a given country, only those years are retained following the start of liberalization
where the index declines by at least 0.01 point. Therefore, the sample encompasses only countries that have
liberalized and only those years when controls on capital flows were relaxed. About 37 countries satisfy the
above criteria (Table 11). For those countries, the mean of capital flow liberalization between 1995 and 2010
was 0.4; the maximum was 0.83; and the minimum was 0.1. This sample of countries is used in the empirical
analysis. However, the actual sample for each regression varies with data availability.
Table 11. Countries That Liberalized Capital Flows during 1995–2010

Afghanistan Chile Israel St. Kitts and Nevis
Algeria Cyprus Jordan Samoa
Armenia Dominica Korea São Tomé and Príncipe
Azerbaijan Ghana Malta Senegal
Bosnia and Herzegovina Guyana Mauritania Seychelles
Botswana Haiti Nigeria Slovak Republic
Bulgaria Honduras Papua New Guinea Slovenia
Burundi Hungary Romania Swaziland
Cambodia Iraq Russia Uganda
Cape Verde
Source: IMF staff.
Methodology
The effects of capital flow liberalization were assessed using the following methodology.28 Various panel data
specifications were used to estimate the impact of liberalization on the following variables: capital outflows,
inflows, and net flows; real GDP growth per capita; inflation; equity returns; and capital adequacy ratios. The
most general specification is:
Y jit = α j + β j1Y jit −1 + β j 2 ka jit + β j 3 Z jit + µ ji + ν jit , (1)
where the subscript i denotes the country (i = 1, …,37), the subscript t denotes the year (t = 1995, …, 2010),
and the subscript j denotes the specific equation for each indicator of interest Yj represents the specific equa-
tion for growth, inflation, capital flows, etc.). The approach includes country fixed effects, µ, to take account
of unobserved heterogeneity among countries.29 The variable ka is the measure of capital flows liberalization,
Z is a set of control variables, and v is the error term.
27 The correlation with the Chinn and Ito (2008) index is 0.78 for the narrower index and 0.86 for the broader index for the
period of availability of the Chinn-Ito index.
28 The main data sources are the IMF’s World Economic Outlook (WEO) database and International Financial Statistics (IFS)
database; the World Bank’s World Development Indicators database; Bloomberg L.P.; Haver Analytics; and Thomson Reuters
Datastream.
29 For example, the fixed effect takes account of all time-invariant country-specific factors, including geography, climate,
ethno-linguistic characteristics, and unchanging political and legal systems.

The dynamic specifications capture the potential inertia in the dependent variables. The presence of the
lagged dependent variable in the equations means that all the estimated coefficients represent short-term
effects, which are the focus of this analysis. The long-term effects can be derived by dividing each coefficient
by 1 minus the coefficient of the lagged dependent variable (1 – β1).
Two econometric issues arise in estimating the above equation. First, some independent variables may be
endogenous because of potential simultaneity or reverse causality. Second, with a fixed-effect estimator, the
lagged dependent variable is, by construction, correlated with the error term and is therefore endogenous. As
a robustness check, System Generalized Method of Moments (System GMM) estimators were also used with
all right-hand variables treated as endogenous (Arellano and Bover, 1995; Blundell and Bond, 1998).
Following Kose and others (2009), the full sample is separated into two subsamples using thresholds.
Countries meeting these threshold conditions are presumed to be better able to reap the growth and stabil-
ity benefits of financial globalization. Kose and others (2009) identify four groups of threshold conditions:
financial market development, institutional quality and governance, macroeconomic policies, and trade
integration. In this analysis, a composite indicator is created by first normalizing, then averaging these four
individual indicators: measures for financial development (ratio of market capitalization to GDP or private
sector credit to GDP), quality of bureaucracy and corruption, ratio of fiscal balances to GDP, and ratio of
trade openness (X + M) to GDP.30 Then, the median of the index is taken as a threshold to separate countries
into two groups: those with an index higher than the median are “above threshold” countries, and those with
an index lower than the median are “below threshold” countries.
Results
The econometric analysis, based on the sample of countries that have liberalized over the past 15 years, sug-
gests that more liberalization is associated with the following:
•• Higher real GDP growth per capita: The coefficients of the liberalization index are significantly negative (a
decline in the index means liberalization of capital flows).
•• Lower inflation rates: The coefficients of the liberalization index are significantly positive, indicating that
lower inflation rates are associated with the liberalization.31
•• Higher equity returns: The coefficients of the equity liberalization index are significantly negative, reflecting
the positive impact of liberalization on equity returns.
•• Lower bank capital adequacy ratios: The coefficients of the liberalization index are significantly positive,
indicating that liberalization may reduce bank capital adequacy ratios. This outcome may be due to a higher
credit and asset expansion associated with the liberalization of capital flows. Furthermore, an increase in
riskier assets following the liberalization of capital flows may put downward pressure on capital ratios.
•• Higher capital inflows and outflows: The coefficients of liberalization are significantly negative, demon-
strating the capability of liberalization to promote gross capital flows. However, the effect of liberalization
on net flows is not statistically significant.
Thresholds
The main results of the relationship between the liberalization of capital flows and various dependent variables
for the subsamples of countries “above threshold” and “below threshold” are as follows:
30 To create a single indicator, each variable is first normalized as follows: Index = (actual value – minimum value) / (maximum
value – minimum value). Then subindices are aggregated using the arithmetic mean.
31 Similar results were obtained by Gruben and McLeod (2002) and Gupta (2008). Using an illustrative model, Gupta (2008)
shows that opening the capital account significantly lowers policymakers’ incentive to generate an inflationary shock. Theoretical
and empirical evidence suggest a strong negative relationship between financial openness and inflation.

•• For countries “above threshold,” the main findings in the full sample are generally confirmed, with a few
differences. For example, the coefficients of liberalization are larger than those in the full sample, indicating
a larger role for capital flow liberalization in countries “above threshold.” In other words, countries that are
above the thresholds reap more benefits from liberalization.
•• For countries “below threshold,” the coefficients of liberalization are not significant in most regressions,
including in the growth regression, indicating a limited role for liberalization of capital flows in these
countries.
Robustness Checks
The results are robust to using alternative estimation approaches or different capital flow liberalization
measures:
•• Several other econometric specifications of panel data have been estimated, including System GMM. The
results are broadly similar to those obtained with the fixed effects estimator.
•• Using the broad restrictiveness index of capital flows leads to similar results.
•• A further robustness test is implemented to investigate whether the effects of capital flow liberalization
depend on the size of the country. Since the sample includes small countries and large countries, the effects
of liberalizing capital flows may depend on the size of the country. To ensure that the conclusions are
unaltered in larger countries, the same regression was estimated by using a pooled weighted least squares
estimator, whereby each observation is weighted by the countries’ GDP in U.S. dollars. This approach
assigns more weight to larger economies without eliminating the small countries. Compared with pooled
(unweighted) least squares, the results are broadly similar.32 Therefore, this suggests that the results are also
valid for larger countries.
In sum, liberalizing capital flows may encourage financial integration, promote growth, and lower inflation,
although the liberalization may also be associated with potential risks to financial stability. Countries that
meet some threshold conditions would be better able to reap the growth instability benefits of liberalization.
32 These techniques are not yet well developed for dynamic panel estimations; therefore, the results can only be compared to
pooled least squares estimations.

References
Arellano, Manuel, and Olympia Bover, 1995, “Another Look at the Instrumental-Variable Estimation of
Error-Components Models,” Journal of Econometrics, Vol. 68, No. 1, pp. 29–51.
Blundell, Richard, and Stephen R. Bond, 1998, “Initial Conditions and Moment Restrictions in Dynamic
Panel Data Models,” Journal of Econometrics, Vol. 87, No. 1, pp. 115–43.
Chinn, Menzie D., and Hiro Ito, 2008, “A New Measure of Financial Openness,” Journal of Comparative
Policy Analysis, Vol. 10, No. 3, pp. 309–22.
Gruben, William C., and Darryl McLeod, 2002, “Capital Account Liberalization and Inflation,” Economics
Letters, Elsevier, Vol. 77, No. 2, pp. 221–25.
Gupta, Abhijit Sen, 2008, “Does Capital Account Openness Lower Inflation?” International Economic
Journal, Korean International Economic Association, Vol. 22, No. 4, pp. 471–87.
International Monetary Fund (IMF), 2011, “Recent Experiences in Managing Capital Inflows—Cross-
Cutting Themes and Possible Policy Framework,” IMF Policy Paper (Washington, February). www.imf.
org/external/np/pp/eng/2011/021411a.pdf.
———, 2012, “Liberalizing Capital Flows and Managing Outflows,” IMF Policy Paper (Washington,
March). www.imf.org/external/np/pp/eng/2012/031312.pdf.
Kose M. Ayhan, Eswar Prasad, Kenneth Rogoff, and Shang-Jin Wei, 2009, “Financial Globalization: A
Reappraisal,” IMF Staff Papers, Vol. 56, No. 1, pp. 8–62.
Saadi-Sedik, Tahsin, and Tao Sun, forthcoming, “Effects of Capital Flow Liberalization—What Is the
Evidence from Recent Experiences of Emerging Market Economies?” IMF Working Paper (Washington:
International Monetary Fund).
Schindler, Martin, 2009, “Measuring Financial Integration: A New Data Set,” IMF Staff Papers, Vol. 56, No.
1, pp. 222–38.

Compilation Guide
Status under IMF Articles of Agreement

Article VIII The member country has accepted the obligations of Article VIII,
Sections 2, 3, and 4, of the IMF’s Articles of Agreement.
Article XIV The member country continues to avail itself of the transitional arrange-
ments of Article XIV, Section 2.
Exchange Measures
Restrictions and/or multi- Exchange restrictions and multiple currency practices (MCPs) maintained
ple currency practices by a member country under Article VIII, Sections 2, 3, and 4, or under
Article XIV, Section 2, of the IMF’s Articles of Agreement, as specified in
the latest IMF staff reports issued as of December 31, 2011. Information
on exchange restrictions and MCPs or on the absence of exchange restric-
tions and MCPs for countries with unpublished IMF staff reports is
published only with the consent of the authorities. If no consent has
been received, the Annual Report on Exchange Agreements and Exchange
Restrictions (AREAER) indicates “Information is not publicly available.”
Hence, “Information is not publicly available” does not necessarily imply
that the country maintains exchange restrictions or MCPs. It indicates
only that the country’s relevant IMF staff report has not been published
and that the authorities have not consented to publication of information
on the existence of exchange restrictions and MCPs. Because the relevant
IMF staff document may refer to years before the reporting period for
this volume of the AREAER, more recent changes in the exchange system
may not be included here. Changes in the category "Restrictions and/or
multiple currency practices" are reflected in the edition of the AREAER
that covers the calendar year during which the IMF staff report with
information on such changes is issued. Changes in these measures that
give rise to exchange restrictions or MCPs that affect other categories
of the country tables are reported under the relevant categories in the
AREAER, in accordance with the standard reporting periods.
Exchange measures imposed Exchange measures on payments and transfers in connection with
for security reasons international transactions imposed by member countries for reasons of
national or international security.
In accordance with IMF Security restrictions on current international payments and transfers
Executive Board Decision on the basis of IMF Executive Board Decision No. 144-(52/51), which
No. 144-(52/51) establishes the obligation of members to notify the IMF before imposing
such restrictions, or, if circumstances preclude advance notification, as
promptly as possible.
Other security restrictions Other restrictions imposed for security reasons (e.g., in accordance
with UN or EU regulations) but not notified to the IMF under Board
Decision 144-(52/51).
References to legal instru- Specific references to the underlying legal materials and hyperlinks to the
ments and hyperlinks legal texts. The category is included at the end of each section.
Exchange Arrangement
Currency The official legal tender of the country.

Other legal tender The existence of another currency that is officially allowed to be used in
the country.
Exchange rate structure If there is one exchange rate, the system is called unitary. If there is more
than one exchange rate that may be used simultaneously for different
purposes and/or by different entities, and if these exchange rates give rise
to MCPs or differing rates for current and capital transactions, the system
is called dual or multiple. Different effective exchange rates resulting
from exchange taxes or subsidies, excessive exchange rate spreads between
buying and selling rates, bilateral payments agreements, and broken cross
rates are not included in this category. Changes in measures within this
category are reported in accordance with the standard reporting periods.
Reclassification in cases related to changes in MCPs occurs in the edition
of the AREAER that covers the calendar year during which the IMF staff
report including information on such changes is issued.
Classification Describes and classifies the de jure and the de facto exchange rate
arrangements.
De jure
The description and effective dates of the de jure exchange rate arrange-
ments are provided by the authorities. Under Article IV, Section 2(a),
of the IMF’s Articles of Agreement and Paragraph 16 of the 2007
Surveillance Decision No. 13919-(07/51), each member is required to
notify the IMF of the exchange arrangements it intends to apply and to
notify the IMF promptly of any changes in its exchange arrangements.
Country authorities are also requested to identify, whenever possible,
which of the existing exchange rate arrangement categories listed below
most closely corresponds to the de jure arrangement in effect. Country
authorities may also wish to briefly describe their official exchange rate
policy. The description includes officially announced or estimated param-
eters of the exchange arrangement (e.g., parity, bands, weights, rate of
crawl, and other indicators used to manage the exchange rate). It also
provides information on the computation of the exchange rate.
De facto
The IMF staff classifies the de facto exchange rate arrangements accord-
ing to the categories below. The name and the definition of the categories
describing the de facto exchange rate arrangements have been modified
in accordance with the revised classification methodology, as of February
1, 2009. Wherever the description of the de jure arrangement can be
empirically confirmed by the staff over at least the previous six months,
the exchange rate arrangement is classified in the same way on a de facto
basis. Because the de facto methodology for classification of exchange
rate regimes is based on a backward-looking approach that relies on past
exchange rate movement and historical data, some countries are reclas-
sified retroactively to a date when the behavior of the exchange rate
changed and matched the criteria for reclassification to the appropriate
category. For these countries, if the retroactive date of reclassification
precedes the period covered in this report, the effective date of change to
be entered in the country chapter and the changes section is deemed to
be the first day of the year in which the decision of reclassification took
place.

No separate legal tender Classification as an exchange rate arrangement with no separate legal tender
involves confirmation of the country authorities’ de jure exchange rate
arrangement. The currency of another country circulates as the sole legal
tender (formal dollarization). Adopting such an arrangement implies
complete surrender by the monetary authorities of control over domestic
monetary policy. Exchange arrangements of countries that belong to a
monetary or currency union in which the same legal tender is shared by
the members of the union are classified under the arrangement govern-
ing the joint currency. This classification is based on the behavior of
the common currency, whereas the previous classification was based on
the lack of a separate legal tender. The classification thus reflects only a
definitional change and is not based on a judgment that there has been a
substantive change in the exchange arrangement or other policies of the
currency union or its members.
Currency board Classification as a currency board involves confirmation of the country
authorities’ de jure exchange rate arrangement. A currency board arrange-
ment is a monetary arrangement based on an explicit legislative commit-
ment to exchange domestic currency for a specified foreign currency at a
fixed exchange rate, combined with restrictions on the issuance authority
to ensure the fulfillment of its legal obligation. This implies that domestic
currency is usually fully backed by foreign assets, eliminating traditional
central bank functions such as monetary control and lender of last resort
and leaving little room for discretionary monetary policy. Some flexibility
may still be afforded, depending on the strictness of the banking rules of
the currency board arrangement.
Conventional peg Classification as a conventional peg involves confirmation of the country
authorities’ de jure exchange rate arrangement. For this category the
country formally (de jure) pegs its currency at a fixed rate to another
currency or a basket of currencies, where the basket is formed, for
example, from the currencies of major trading or financial partners and
weights reflect the geographic distribution of trade, services, or capital
flows. The anchor currency or basket weights are public or notified to
the IMF. The country authorities stand ready to maintain the fixed parity
through direct intervention (i.e., via sale or purchase of foreign exchange
in the market) or indirect intervention (e.g., via exchange-rate-related use
of interest rate policy, imposition of foreign exchange regulations, exercise
of moral suasion that constrains foreign exchange activity, or intervention
by other public institutions). There is no commitment to irrevocably keep
the parity, but the formal arrangement must be confirmed empirically:
the exchange rate may fluctuate within narrow margins of less than ±1%
around a central rate or the maximum and minimum values of the spot
market exchange rate must remain within a narrow margin of 2% for at
least six months.
Stabilized arrangement Classification as a stabilized arrangement entails a spot market exchange
rate that remains within a margin of 2% for six months or more (with the
exception of a specified number of outliers or step adjustments) and is not
floating. The required margin of stability can be met either with respect
to a single currency or a basket of currencies, where the anchor currency
or the basket is ascertained or confirmed using statistical techniques.
Classification as a stabilized arrangement requires that the statistical crite-
ria are met and that the exchange rate remains stable as a result of official
action (including structural market rigidities). The classification does not
imply a policy commitment on the part of the country authorities.

Crawling peg Classification as a crawling peg involves confirmation of the country

authorities’ de jure exchange rate arrangement. The currency is adjusted
in small amounts at a fixed rate or in response to changes in selected
quantitative indicators, such as past inflation differentials vis-à-vis major
trading partners or differentials between the inflation target and expected
inflation in major trading partners. The rate of crawl can be set to gener-
ate inflation-adjusted changes in the exchange rate (backward looking)
or set at a predetermined fixed rate and/or below the projected inflation
differentials (forward looking). The rules and parameters of the arrange-
ment are public or notified to the IMF.
Crawl-like arrangement For classification as a crawl-like arrangement, the exchange rate must
remain within a narrow margin of 2% relative to a statistically identified
trend for six months or more (with the exception of a specified number
of outliers), and the exchange rate arrangement cannot be considered as
floating. Usually, a minimum rate of change greater than allowed under
a stabilized (peg-like) arrangement is required. However, an arrangement
is considered crawl-like with an annualized rate of change of at least 1%,
provided the exchange rate appreciates or depreciates in a sufficiently
monotonic and continuous manner.
Pegged exchange rate within Classification as a pegged exchange rate within horizontal bands involves
horizontal bands confirmation of the country authorities’ de jure exchange rate arrange-
ment. The value of the currency is maintained within certain margins
of fluctuation of at least ±1% around a fixed central rate, or a margin
between the maximum and minimum value of the exchange rate that
exceeds 2%. It includes arrangements of countries in the ERM of the old
European Monetary System, which was replaced with the ERM II of the
Economic and Monetary Union (EMU) on January 1, 1999, for coun-
tries with margins of fluctuation wider than ±1%. The central rate and
width of the band are public or notified to the IMF.
Other managed arrangement This category is a residual and is used when the exchange rate arrange-
ment does not meet the criteria for any of the other categories.
Arrangements characterized by frequent shifts in policy may fall into this
category.
Floating A floating exchange rate is largely market determined, without an ascer-
tainable or predictable path for the rate. In particular, an exchange
rate that satisfies the statistical criteria for a stabilized or a crawl-like
arrangement is classified as such unless it is clear that the stability of the
exchange rate is not the result of official actions. Foreign exchange market
intervention may be either direct or indirect and serves to moderate the
rate of change and prevent undue fluctuations in the exchange rate, but
policies targeting a specific level of the exchange rate are incompatible
with floating. Indicators for managing the rate are broadly judgmental
(e.g., balance of payments position, international reserves, parallel market
developments). Floating arrangements may exhibit more or less exchange
rate volatility, depending on the size of the shocks affecting the economy.

Free floating A floating exchange rate can be classified as free floating if intervention
occurs only exceptionally and aims to address disorderly market condi-
tions and if the authorities have provided information or data confirm-
ing that intervention has been limited to at most three instances in the
previous six months, each lasting no more than three business days. If
the information or data required are not available to the IMF staff, the
arrangement is classified as floating. Detailed data on intervention or
official foreign exchange transactions will not be requested routinely of
member countries, but only when other information available to the
IMF staff is not sufficient to resolve uncertainties about the appropriate
classification.
Official exchange rate Provides information on the computation of the exchange rate and the
use of the official exchange rate (accounting, customs valuation purposes,
foreign exchange transactions with the government).
Monetary policy framework The category includes a brief description of the monetary policy frame-
work in effect according to the following subcategories:
Exchange rate anchor The monetary authority buys or sell foreign exchange to maintain the
exchange rate at its predetermined level or within a range. The exchange
rate thus serves as the nominal anchor or intermediate target of monetary
policy. These frameworks are associated with exchange rate arrangements
with no separate legal tender, currency board arrangements, pegs (or stabi-
lized arrangements) with or without bands, crawling pegs (or crawl-like
arrangements), and other managed arrangements.
Monetary aggregate target The monetary authority uses its instruments to achieve a target growth
rate for a monetary aggregate, such as reserve money, M1, or M2, and the
targeted aggregate becomes the nominal anchor or intermediate target of
monetary policy.
Inflation-targeting framework This involves the public announcement of numerical targets for infla-
tion, with an institutional commitment by the monetary authority to
achieve these targets, typically over a medium-term horizon. Additional
key features normally include increased communication with the public
and the markets about the plans and objectives of monetary policymakers
and increased accountability of the central bank for achieving its inflation
objectives. Monetary policy decisions are often guided by the deviation of
forecasts of future inflation from the announced inflation target, with the
inflation forecast acting (implicitly or explicitly) as the intermediate target
of monetary policy.
Other monetary framework The country has no explicitly stated nominal anchor, but rather monitors
various indicators in conducting monetary policy. This category is also
used when no relevant information on the country is available.
Exchange tax Foreign exchange transactions are subject to a special tax. Bank commis-
sions charged on foreign exchange transactions are not included in
this category; rather, they are listed under the exchange arrangement
classification.
Exchange subsidy Foreign exchange transactions are subsidized by using separate, nonmar-
ket exchange rates.
Foreign exchange market The existence of a foreign exchange market.
Spot exchange market Institutional setting of the foreign exchange market for spot transactions
and market participants. Existence and significance of the parallel market.

Operated by the The role of the central bank in providing access to foreign exchange to
central bank market participants through a foreign exchange standing facility, alloca-
tion of foreign exchange to authorized dealers or other legal and private
persons, the management of buy or sell auctions or fixing sessions, and
the price determination and frequency of central bank operations.
A foreign exchange standing facility allows market participants to buy
foreign exchange from or sell it to the central bank at predetermined
exchange rates at their own initiative and is usually instrumental in main-
taining a hard or soft peg arrangement. The credibility of the facility
depends to a large extent on the availability of foreign exchange reserves
to back the facility.
Allocation involves redistribution of foreign exchange inflows by the
central bank to market participants for specific international transac-
tions or in specific amounts (rationing). Foreign exchange allocation is
often used to provide foreign exchange for strategic imports such as oil or
food when foreign exchange reserves are scarce. In an allocation system,
companies and individuals often transact directly with the central bank,
and commercial banks may buy foreign exchange only for their clients’
underlying international transactions. Purchases of foreign exchange for
banks’ own books typically are not permitted.
Auctions are organized by the central bank, usually for market partici-
pants to buy and/or sell foreign exchange. Auctions can take the form of
multiple-price auctions (all successful bidders pay the price they offer) or
single-price auctions (all successful bidders pay the same price, which is
the market-clearing/cut-off price). The authorities may exercise discre-
tion in accepting or rejecting offers, and sometimes a floor price is deter-
mined in advance, below which offers are not accepted. The frequency
of auctions depends mainly on the amount or availability of foreign
exchange to be auctioned and on the role the auction plays in the foreign
exchange market.
Fixing sessions are often organized by the central bank at the early stage
of market development to establish a market-clearing exchange rate. The
central bank monitors the market closely and often actively participates
in price formation by selling or buying during the session to achieve a
certain exchange rate target. The price determined at the fixing session is
often used for foreign exchange transactions outside the session and/or for
accounting and valuation purposes.
Interbank market The organization and operation of the interbank market; interven-
tions. The existence of brokerage, over-the-counter, and market-making
arrangements.
Forward exchange market The existence of a forward exchange market and the institutional arrange-
ment and market participants.
Official cover of forward An official entity (the central bank or the government) assumes the
operations exchange risk of certain foreign exchange transactions.

Arrangements for Payments and Receipts

Prescription of currency The official requirements affecting the selection of currency and the
requirements method of settlement for transactions with other countries. When a
country has payments agreements with other countries, the terms of these
agreements often lead to a prescription of currency for specified categories
of payments to, and receipts from, the countries concerned. This category
includes information on the use of domestic currency in transactions
between residents and nonresidents, both domestically and abroad; it also
indicates any restrictions on the use of foreign currency among residents.
Payments arrangements
Bilateral payments Two countries have an agreement to prescribe specific rules for payments
arrangements to each other, including cases in which private parties are also obligated
to use specific currencies. These agreements can be either operative or
inoperative.
Regional arrangements More than two parties participate in a payments agreement.
Clearing agreements The official bodies of two or more countries agree to offset with some
regularity the balances that arise from payments to each other as a result
of the exchange of goods, services, or—less often—capital.
Barter agreements and open The official bodies of two or more countries agree to offset exports of
accounts goods and services to one country with imports of goods and services
from the same country, without payment.
Administration of control The authorities’ division of responsibility for monitoring policy, admin-
istering exchange controls, and determining the extent of delegation of
powers to outside agencies (banks are often authorized to effect foreign
exchange transactions).
Payments arrears Official or private residents of a member country default on their
payments or transfers in foreign exchange to nonresidents. This cate-
gory includes only the situation in which domestic currency is avail-
able for residents to settle their debts, but they are unable to obtain
foreign exchange—for example, because of the presence of an officially
announced or unofficial queuing system. It does not cover nonpayment
by private parties owing to bankruptcy of the party concerned.
Controls on trade in gold Separate rules for trading in gold domestically and with foreign countries.
(coins and/or bullion)
Controls on exports and Regulations governing the physical movement of means of payment
imports of banknotes between countries. Where information is available, the category
distinguishes between separate limits for the (1) export and import of
banknotes by travelers and (2) export and import of banknotes by banks
and other authorized financial institutions.

Resident Accounts
Indicates whether resident accounts that are maintained in the national
currency or in foreign currency, locally or abroad, are allowed and
describes how they are treated and the facilities and limitations attached
to such accounts. When there is more than one type of resident account,
the nature and operation of the various types of accounts are also
described—for example, whether residents are allowed to open foreign
exchange accounts with or without approval from the exchange control
authority, whether these accounts may be held domestically or abroad,
and whether the balances on accounts held by residents in domestic
currency may be converted into foreign currency.
Nonresident Accounts
Indicates whether local nonresident accounts maintained in the national
currency or in foreign currency are allowed and describes how they are
treated and the facilities and limitations attached to such accounts. When
there is more than one type of nonresident account, the nature and opera-
tion of the various types of accounts are also described.
Blocked accounts Accounts of nonresidents, usually in domestic currency. Regulations
prohibit or limit the conversion and/or transfer of the balances of such
accounts.
Imports and Import Payments

Describes the nature and extent of exchange and trade restrictions on
imports.
Foreign exchange budget Information on the existence of a foreign exchange plan, i.e., prior alloca-
tion of a certain amount of foreign exchange, usually on an annual basis,
for the importation of specific types of goods and/or services. In some
cases, also differentiating among individual importers.
Financing requirements for Information on specific import-financing regulations limiting the rights
imports of residents to enter into private contracts in which the financing options
differ from those in the official regulations.
Documentation require-
ments for release of foreign
exchange for imports
Domiciliation requirements The obligation to domicile the transactions with a specified (usually
domestic) financial institution.
Preshipment inspection Most often a compulsory government measure aimed at establishing the
veracity of the import contract in terms of volume, quality, and price.
Letters of credit Parties are obligated to use letters of credit (LCs) as a form of payment for
their imports.
Import licenses used as Import licenses are used not for trade purposes but to restrict the avail-
exchange licenses ability of foreign exchange for legitimate trade.
Import licenses and other
nontariff measures
Positive list A list of goods that may be imported.
Negative list A list of goods that may not be imported.

Open general licenses Indicates arrangements whereby certain imports or other international
transactions are exempt from the restrictive application of licensing
requirements.
Licenses with quotas Refers to situations in which a license for the importation of a certain
good is granted but a specific limit is imposed on the amount to be
imported.
Other nontariff measures May include prohibitions on imports of certain goods from all countries
or of all goods from a certain country. Several other nontariff measures are
used by countries (e.g., phytosanitary examinations, setting of standards),
but these are not covered fully in the report.
Import taxes and/or tariffs A brief description of the import tax and tariff system, including taxes
levied on the foreign exchange made available for imports.
Taxes collected through the Indicates if any taxes apply to the exchange side of an import transaction.
exchange system
State import monopoly Private parties are not allowed to engage in the importation of certain
products, or they are limited in their activity.
Exports and Export Proceeds

Describes restrictions on the use of export proceeds, as well as regulations
on exports.
Repatriation requirements The obligation of exporters to repatriate export proceeds.
Surrender requirements
Surrender to the central bank Regulations requiring the recipient of repatriated export proceeds to sell,
sometimes at a specified exchange rate, any foreign exchange proceeds in
return for local currency to the central bank.
Surrender to authorized Regulations requiring the recipient of repatriated export proceeds to sell,
dealers sometimes at a specified exchange rate, any foreign exchange proceeds in
return for local currency to commercial banks or exchange dealers autho-
rized for this purpose or on a foreign exchange market.
Financing requirements Information on specific export-financing regulations limiting the rights
of residents to enter into private contracts in which the financing options
differ from those in the official regulations.
Documentation The same categories as in the case of imports are used.
requirements
Export licenses Restrictions on the right of residents to export goods. These restrictions
may take the form of quotas (where a certain quantity of shipment abroad
is allowed) or the absence of quotas (where the licenses are issued at the
discretion of the foreign trade control authority).
Export taxes A brief description of the export tax system, including any taxes that are
levied on foreign exchange earned by exporters.

Payments for Invisible Transactions and Current Transfers

Describes the procedures for effecting payments abroad in connection
with current transactions in invisibles, with reference to prior approval
requirements, the existence of quantitative and indicative limits, and/
or bona fide tests. Detailed information on the most common categories
of transactions is provided only when regulations differ for the various
categories. Indicative limits establish maximum amounts up to which
the purchase of foreign exchange is allowed on declaration of the nature
of the transaction, mainly for statistical purposes. Amounts above those
limits are granted if the bona fide nature of the transaction is established
by the presentation of appropriate documentation. Bona fide tests also
may be applied to transactions for which quantitative limits have not
been established.
Trade-related payments Includes freight and insurance (including possible regulations on non-
trade-related insurance payments and transfers), unloading and storage
costs, administrative expenses, commissions, and customs duties and fees.
Investment-related payments Includes profits and dividends, interest payments (including interest on
debentures, mortgages, etc.), amortization of loans or depreciation of
foreign direct investments, and payments and transfers of rent.
Payments for travel Includes international travel for business, tourism, etc.
Personal payments Includes medical expenditures abroad, study expenses abroad, pensions
(including regulations on payments and transfers of pensions by both
government and private pension providers on behalf of nonresidents, as
well as the transfer of pensions due to residents living abroad), and family
maintenance and alimony (including regulations on payments and trans-
fers abroad of family maintenance and alimony by residents).
Foreign workers’ wages Transfer abroad of earnings by nonresidents working in the country.
Credit card use abroad Use of credit and debit cards to pay for invisible transactions.
Other payments Includes subscription and membership fees, authors’ royalties, consulting
and legal fees, etc.
Proceeds from Invisible Transactions and Current Transfers

Describes regulations governing exchange receipts derived from transac-
tions in invisibles—including descriptions of any limitations on their
conversion into domestic currency—and the use of those receipts.
Repatriation requirements The definitions of repatriation and surrender requirements are similar to
those applied to export proceeds.
Surrender to the central bank
Surrender to authorized
dealers
Restrictions on use of funds Refers mainly to the limitations imposed on the use of receipts previously
deposited in certain types of bank accounts.

Capital Transactions
Describes regulations influencing both inward and outward capital flows.
The concept of controls on capital transactions is interpreted broadly.
Thus, controls on capital transactions include prohibitions; need for prior
approval, authorization, and notification; dual and multiple exchange
rates; discriminatory taxes; and reserve requirements or interest penalties
imposed by the authorities that regulate the conclusion or execution of
transactions or transfers and the holding of assets at home by nonresi-
dents and abroad by residents. The coverage of the regulations applies to
receipts as well as to payments and to actions initiated by nonresidents
and residents. In addition, because of the close association with capital
transactions, information is also provided on local financial operations
conducted in foreign currency, describing specific regulations in effect
that limit residents’ and nonresidents’ issuance of securities denominated
in foreign currency or, generally, limitations on contract agreements
expressed in foreign exchange.
Repatriation requirements The definitions of repatriation and surrender requirements are similar to
those applied to export proceeds.
Surrender to authorized
dealers
Controls on capital and Refers to public offerings or private placements on primary markets or
money market instruments their listing on secondary markets.
On capital market securities Refers to shares and other securities of a participating nature and bonds
and other securities with an original maturity of more than one year.
Shares or other securities of a Includes transactions involving shares and other securities of a participat-
participating nature ing nature if they are not effected for the purpose of acquiring a last-
ing economic interest in the management of the enterprise concerned.
Investment for the purpose of acquiring a lasting economic interest is
addressed under foreign direct investment.
Bonds or other debt securities Refers to bonds and other securities with an original maturity of more
than one year. The term “other debt securities” includes notes and
debentures.
On money market Refers to securities with an original maturity of one year or less and
instruments includes short-term instruments, such as certificates of deposit and bills of
exchange. The category also includes treasury bills and other short-term
government paper, bankers’ acceptances, commercial paper, interbank
deposits, and repurchase agreements.
On collective investment Includes share certificates and registry entries or other evidence of investor
securities interest in an institution for collective investment, such as mutual funds,
and unit and investment trusts.

Controls on derivatives and Refers to operations in other negotiable instruments and nonsecured
other instruments claims not covered under the above subsections. These may include opera-
tions in rights; warrants; financial options and futures; secondary market
operations in other financial claims (including sovereign loans, mortgage
loans, commercial credits, negotiable instruments originating as loans,
receivables, and discounted bills of trade); forward operations (including
those in foreign exchange); swaps of bonds and other debt securities; cred-
its and loans; and other swaps (e.g., interest rate, debt/equity, equity/debt,
foreign currency, and swaps of any of the instruments listed above). Also
included are controls on operations in foreign exchange without any other
underlying transaction (spot or forward trading on the foreign exchange
markets, forward cover operations, etc.).
Controls on credit
operations
Commercial credits Covers operations directly linked with international trade transactions or
with the rendering of international services.
Financial credits Includes credits other than commercial credits granted by all residents,
including banks, to nonresidents, or vice versa.
Guarantees, sureties, and Includes guarantees, sureties, and financial backup facilities provided by
financial backup facilities residents to nonresidents and vice versa. It also includes securities pledged
for payment or performance of a contract—such as warrants, perfor-
mance bonds, and standby letters of credit—and financial backup facili-
ties that are credit facilities used as a guarantee for independent financial
operations.
Controls on direct Refers to investments for the purpose of establishing lasting economic
investment relations both abroad by residents and domestically by nonresidents.
These investments are essentially for the purpose of producing goods
and services, and, in particular, in order to allow investor participation
in the management of an enterprise. The category includes the creation
or extension of a wholly owned enterprise, subsidiary, or branch and the
acquisition of full or partial ownership of a new or existing enterprise that
results in effective influence over the operations of the enterprise.
Controls on liquidation of Refers to the transfer of principal, including the initial capital and capital
direct investment gains, of a foreign direct investment as defined above.
Controls on real estate Refers to the acquisition of real estate not associated with direct invest-
transactions ment, including, for example, investments of a purely financial nature in
real estate or the acquisition of real estate for personal use.
Controls on personal capi- Covers transfers initiated on behalf of private persons and intended to
tal transactions benefit other private persons. It includes transactions involving property
to which the promise of a return to the owner with payments of interest
is attached (e.g., loans or settlements of debt in their country of origin by
immigrants) and transfers effected free of charge to the beneficiary (e.g.,
gifts and endowments, loans, inheritances and legacies, and emigrants’
assets).

Provisions Specific to the Financial Sector

Provisions specific to Describes regulations that are specific to these institutions, such as mone-
commercial banks and tary, prudential, and foreign exchange controls. Inclusion of an entry in
other credit institutions this category does not necessarily signify that the aim of the measure is to
control the flow of capital. Some of these items (e.g., borrowing abroad,
lending to nonresidents, purchase of locally issued securities denominated
in foreign exchange, investment regulations) may be repetitions of entries
under respective categories of controls on capital and money market
instruments, on credit operations, or on direct investments, when the
same regulations apply to commercial banks as well as to other residents.
Open foreign exchange posi- Describes regulations on certain commercial bank balance sheet items
tion limits (including capital) and on limits covering commercial banks’ positions in
foreign currencies (including gold).
Provisions specific to insti- Describes controls specific to institutions, such as insurance companies,
tutional investors pension funds, investment firms (including brokers, dealers, or advisory
firms), and other securities firms (including collective investment funds).
Incorporates measures that impose limitations on the composition of
the institutional investors’ foreign or foreign currency assets (reserves,
accounts) and liabilities (e.g., investments in equity capital of institu-
tional investors or borrowing from nonresidents) and/or that differentiate
between residents and nonresidents. Examples of such controls are restric-
tions on investments because of rules regarding the technical, mathemati-
cal, security, or mandatory reserves; solvency margins; premium reserve
stocks; or guarantee funds of nonbank financial institutions. Inclusion of
an entry in this category does not necessarily signify that the aim of the
measure is to control the flow of capital.
Insurance companies
Pension funds
Investment firms and collec-
tive investment funds
Listing conventions used in the report are as follows:

•• When it is unclear whether a particular category or measure exists—because pertinent information is not
available at the time of publication—the category is displayed with the notation “n.a.”
•• If a measure is known to exist but specific information on it is not available, the category is displayed with
the notation “yes.”
•• If no measures exist on any item within a category, the category is displayed with the notation “no.”
•• If members have provided the IMF staff with information indicating that a category or an item is not
regulated, these are marked “n.r.”
•• When relevant documents have not been published and the authorities have not consented to the publica-
tion of the information as included in the IMF staff report, the text reads, “Information is not publicly
available.”

Summary Features of Exchange Arrangements and Regulatory Frameworks for Current and Capital Transactions in IMF Member Countries
(As of date shown on first page of country chapter; see symbol key at end of table)
countries with these features

Total number of member
Antigua and Barbuda
The Bahamas
Afghanistan
Bangladesh
Azerbaijan
Argentina
Barbados
Australia
Armenia
Belgium
Bahrain
Albania
Bhutan
Belarus
Austria
Angola
Algeria
Bolivia
Benin
Belize
Article VIII 168 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Article XIV 19 ● ● ● ●
Exchange Rate Arrangements
No separate legal tender 13
Currency board 11 ◊
Conventional peg 41 ◊ ◊ ◊ ◊ ▲ Ì
Stabilized arrangement 16 ◊ ◊
Crawling peg 3 ◊
Crawl-like arrangement 12 ◊
Pegged exchange rate within
horizontal bands 1
Other managed arrangement 24 * ● ●
Floating 35 ● ● ●
Free floating 31 ● ⊕ ⊕
Exchange rate structure
Dual exchange rates 15 ● ●
Multiple exchange rates 7 ●
Arrangements for Payments
and Receipts
Bilateral payments arrangements 67 ● ● ● ● ● ● ● ● ● ● ● ● ●
Payments arrears 32 ● ● ●
Controls on payments for invisible
transactions and current transfers 95 ● ● ● ● ● ● ● ● ● ● ● ●
Proceeds from exports and/or invisible
transactions
Repatriation requirements 87 ● ● ● – ● ● ● ● ● ● ● ● ●
Surrender requirements 57 ● ● ● ● ● ● ● ● ● ●
Controls on:
Capital market securities 147 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Money market instruments 124 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Collective investment securities 123 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Derivatives and other instruments 98 ● ● ■ ● ● ● ● ● ● ● ● ● ● ● ● ●
Commercial credits 83 ● ● ● ● ● ● ● ● ●
Financial credits 112 ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Guarantees, sureties, and financial
backup facilities 77 ● ● ● ● ● ● ● ● ● ●
Direct investment 150 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Liquidation of direct investment 46 ● ● ● ● ● ● ●
Real estate transactions 145 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Personal capital transactions 94 ● ● – ● ● ● ● ● ● ● ● ● ●
Provisions specific to:
Commercial banks and other credit
institutions 168 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Institutional investors 141 ● ● ■ – ● ● ● ● ● ● ● ● ● ● ● ● ● ●

Central African Republic
Dem. Rep. of the Congo

Bosnia and Herzegovina
Brunei Darussalam
Republic of Congo
Côte d’Ivoire
Burkina Faso
Cape Verde
Costa Rica
Cameroon
Cambodia
Colombia
Botswana
Comoros
Burundi
Bulgaria
Canada
Croatia
China
Brazil
Chad
Chile
Article VIII ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Article XIV ● ●
No separate legal tender
Currency board ▲ Ì ▲
Conventional peg ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲
Stabilized arrangement ◊
Crawling peg *
Crawl-like arrangement ◊ ▲
horizontal bands
Other managed arrangement ● ● ●
Floating ● ●
Free floating ● ●
Dual exchange rates ●
Multiple exchange rates
and Receipts
Bilateral payments arrangements ● ● ● ● ● ● ● ● ●
Payments arrears – ● ● ● ● ●
transactions and current transfers ● ● ● ● ● ● ● ● ● ● ● ●
transactions
Repatriation requirements ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Surrender requirements ● ● ● ● ● ● ● ● ● ●
Controls on:
Capital market securities ● ● ● ● ● ● – ● ● ● ● ● ● ● ● ● ● ● ●
Money market instruments ● ● ● ● – ● ● ● ● ● ● ● ● ● ● ● ●
Collective investment securities ● ● ● ● – ● ● ● ● ● ● ● ● ● ● ●
Derivatives and other instruments ● ● ● ■ ■ ■ ■ ● ● ● ● ● ■ ● ●
Commercial credits ● ● ● ● ● ● ● ● ● ● ● ●
Financial credits ● ● ● ● ● ● ● ● ● ● ● ● ●
backup facilities ● ● ■ ● ■ ■ ● ● ● ● ■ ●
Direct investment ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Liquidation of direct investment ● ● ● ● ● ● ● ● ●
Real estate transactions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Personal capital transactions ● ● ● ● ● ● ● ● ● ● ● ● ●
institutions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Institutional investors ● ● ● ● ● ● ● ● ● – ● ● ● ● ● – ● ● ● ●

Dominican Republic
Equatorial Guinea
Czech Republic
The Gambia
El Salvador
Dominica
Denmark
Germany
Djibouti
Ethiopia
Ecuador
Georgia
Finland
Estonia
Cyprus
Gabon
Greece
Eritrea
Ghana
France
Egypt
Fiji
Article VIII ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Article XIV ● ●
No separate legal tender ◊ ◊
Currency board ◊ ◊
Conventional peg v ▲ ◊ * ▲
Stabilized arrangement *
Crawling peg
Crawl-like arrangement ◊ ◊
horizontal bands
Other managed arrangement
Floating ● ● ●
Free floating ⊕ ● ⊕ ⊕ ⊕ ⊕ ⊕
Dual exchange rates ● ●
and Receipts
Bilateral payments arrangements ● ● ● ● ●
Payments arrears ● ● ● ● ●
transactions and current transfers ● ● ● ● ● ● ● ● ●
transactions
Repatriation requirements ● ● ● ● ● ● ● ●
Surrender requirements ● ● ● ● ● ● ●
Controls on:
Capital market securities ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Money market instruments ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Collective investment securities ● ● ● ● ● ● ● – ● ● ● ● ● ● ●
Derivatives and other instruments ● – ● ● ■ – ● ● ■ ● ● ●
Commercial credits ● ● ● ● ● ● ● ●
Financial credits ● ● ● ● ● ● ● ● ● ● ● ● ●
backup facilities ● ● ● ● ■ – ● ● ■
Direct investment ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Liquidation of direct investment ● ● ● ●
Real estate transactions ● ● ● ● ● ● ● ● ● ● ● ● ●
Personal capital transactions ● ● ● ● ● ● ●
institutions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Institutional investors ● ● ● ● ● ● ● ● ● ● – ● ● ● ● ● ● ● ● ● ●

Islamic Republic of Iran

Guinea-Bissau
Kazakhstan
Guatemala
Honduras
Indonesia
Hungary
Grenada
Guyana
Kiribati
Jamaica
Guinea
Iceland
Ireland
Jordan
Kenya
Japan
Haiti
India
Israel
Italy
Iraq
Article VIII ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Article XIV ●
No separate legal tender Ì
Currency board ◊
Conventional peg ▲ ◊
Stabilized arrangement ◊ ◊ ◊
Crawling peg
Crawl-like arrangement ◊ ◊ ◊ ◊
horizontal bands
Other managed arrangement ● *
Floating ● ● ● ● ● ●
Free floating ⊕ ⊕ ●
and Receipts
Bilateral payments arrangements ● ● ● ● ● ● ●
Payments arrears ● ● ● ● ●
transactions and current transfers ● ● ● ● ● ● ● ● ● ●
transactions
Repatriation requirements ● ● ● ● ● ● ● ● ■
Surrender requirements ● ● ● ●
Controls on:
Capital market securities ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Money market instruments ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Collective investment securities ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Derivatives and other instruments ● ● ● ● ● ● – ● ● ● ● ● ●
Commercial credits ● ● ● ● ● ● ● ● ● ● ●
Financial credits ● ● ● ● ● ● ● ● ● ● ● ● ● ●
backup facilities ● ● ● ● ● ● ● ● ● ● ●
Direct investment ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Liquidation of direct investment ● ● ● ● ● ● ■
Personal capital transactions ● ● ● ● ● ● ● ● ■
institutions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ■
Institutional investors ● – ● – ● ● ● ● ● – ● ● ● ● ● ● ● –

Kyrgyz Republic
FYR Macedonia
Marshall Islands
Luxembourg
Madagascar
Mauritania
Lao P.D.R.
Mauritius
Lithuania
Maldives
Lebanon
Malaysia
Lesotho
Malawi
Kosovo
Kuwait
Liberia
Latvia
Korea
Malta
Libya
Mali
Article VIII ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Article XIV ● ● ●
No separate legal tender ▲ ◊
Currency board v
Conventional peg * v Ì ○ ▲
Stabilized arrangement ◊ ◊ ▲ ◊
Crawling peg
Crawl-like arrangement
horizontal bands
Other managed arrangement ● ◊ ● ● ●
Free floating ⊕ ⊕
Dual exchange rates ● ● ●
and Receipts
Bilateral payments arrangements ● ● ● ● ● ● ●
Payments arrears ● – ● ●
transactions and current transfers ● ● ● ● ● ● ● ● ●
transactions
Repatriation requirements ● ● ● ● ● ● ● ● ●
Surrender requirements ● ● ● ● ●
Controls on:
Capital market securities ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● – ● ●
Money market instruments ● ● ● ● ● ● ● ● ● ● ● ● ● – ● ●
Collective investment securities ● ● ● ● ● ● ● ● ● ● ● ● ● – ■ ●
Derivatives and other instruments ● ■ ● ● ■ ■ ● ● ● ● ● ● ■ ● – ■
Commercial credits ● ● ● ● ● ● ● ● ● –
Financial credits ● ● ● ● ● ● ● ● ● ● ● – ●
backup facilities ● ● ● ● ● ● ● – ●
Direct investment ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Liquidation of direct investment ● ● –
Real estate transactions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Personal capital transactions ● ● ● ● ● ● ● ● ● ● – ●
institutions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● – ● ●
Institutional investors ● ● ● – ● ● ● ● ● ● ● – ● – ● ● ● – ●

Papua New Guinea

New Zealand
Mozambique
Montenegro
Netherlands
Micronesia
Nicaragua
Myanmar
Mongolia
Morocco
Paraguay
Moldova
Namibia
Pakistan
Norway
Panama
Mexico
Nigeria
Oman
Nepal
Niger
Palau
Article VIII ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Article XIV ● ●
No separate legal tender ◊ ▲ ◊ ◊
Currency board
Conventional peg * Ì Ì ▲ ◊
Stabilized arrangement
Crawling peg ◊
horizontal bands
Other managed arrangement ● ● ●
Floating ● ● ● ● ●
Free floating ● ⊕ ● ●
Multiple exchange rates ● ●
and Receipts
Payments arrears ● ● ●
transactions and current transfers ● ● ● ● ● ● ● ● ● ● ● ●
transactions
Repatriation requirements ● ● ● ● ● ● ● ● ●
Controls on:
Capital market securities ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Money market instruments ● ■ ● ● ● ● ● ● ● ● ● ● ●
Collective investment securities ● ● ● ● ● ● ● ● ●
Derivatives and other instruments ● ● – ● ● ● ● ● ● ● ● ●
Commercial credits ■ ● ● ● ● ● ● ● ● ● ●
Financial credits ● ■ ● ● ● ● ● ● ● ● ● ●
backup facilities ● ■ ● ● ● ● ● ● ● ● ● ●
Direct investment ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Liquidation of direct investment ● ● ● ● ● ●
Personal capital transactions ● ■ ● ● ● ● ● ● ● ● ● ● ● ●
institutions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Institutional investors ● – ● – ● ● ● – ● ● ● ● ● – ● – ● ● ● ●

São Tomé and Príncipe
Solomon Islands
Slovak Republic
Saudi Arabia
South Africa
Sierra Leone
San Marino
Philippines
Seychelles
Singapore
Romania
Portugal
Slovenia
Rwanda
Somalia
Senegal
Poland
Samoa
Russia
Serbia
Qatar
Peru
Article VIII ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Article XIV ● ●
No separate legal tender ▲
Currency board
Conventional peg ◊ * ▲ ◊ ▲
Crawling peg
Crawl-like arrangement ◊
horizontal bands
Other managed arrangement ● * ●
Floating ● ● ● ● ● ● ●
Free floating ● ⊕ ⊕ ⊕ ●
Multiple exchange rates ● ●
and Receipts
Bilateral payments arrangements ● ● ● ● ● ● ● ● ● –
Payments arrears ● ● ● ● –
transactions and current transfers ● ● ● ● ● ● ● ● ● ●
transactions
Repatriation requirements ● ● ● ● ● ● ● ● ● ●
Surrender requirements ● ● ● ● ●
Controls on:
Capital market securities ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Money market instruments ● ● ● ● ● ● ● ● ● ● ● ●
Collective investment securities ● ● ● ● ● ● ● ● ● ● ● ● ● – ●
Derivatives and other instruments ● ● ● ● ● ● ● ● ■ ● ● – ●
Commercial credits ● ● ● – ● ● ●
Financial credits ● ● ● – ● ● ● ● ● ● ● ●
backup facilities ● – ● ● ● ● ● ●
Direct investment ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Liquidation of direct investment ● ● ●
Real estate transactions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Personal capital transactions ● ● ● ● ● ● ● ● ● ● – ●
institutions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● – ●
Institutional investors ● ● ● ● ● ● – ● ● ● – ● ● ● – ● ● ● ● – ●

St. Vincent and the Grenadines
Trinidad and Tobago

St. Kitts and Nevis
Turkmenistan
The Bahamas
Timor-Leste
Switzerland
Swaziland
Tajikistan
Sri Lanka
Suriname
Tanzania
Thailand
St. Lucia
Sweden
Tunisia
Turkey
Sudan
Tonga
Spain
Togo
Syria
Article VIII ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Article XIV ● ●
No separate legal tender ◊
Currency board ◊ ◊ ◊
Conventional peg Ì ◊ ▲ ◊
Stabilized arrangement ◊ ◊ ◊
Crawling peg
Crawl-like arrangement *
horizontal bands *
Other managed arrangement ● ● *
Floating ● ● ● ●
Free floating ⊕ ●
Dual exchange rates ● ● ●
Multiple exchange rates ●
and Receipts
Payments arrears ● ●
transactions and current transfers ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
transactions
Repatriation requirements ● ● ● ● ● ● ● ● ● ● ● ● ●
Controls on:
Capital market securities ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Money market instruments ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Collective investment securities ● ● ● ● ● ■ ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Derivatives and other instruments ● ● ■ ● ■ ● ● ● ● ● ● ● ● ● ● ● ● ● –
Commercial credits ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Financial credits ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
backup facilities ● ● ● ● ● ● ● ● ● ● ● ● ●
Direct investment ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Liquidation of direct investment ● – ● ● ● ●
Real estate transactions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Personal capital transactions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● –
institutions ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Institutional investors ● ● ● ● ● ● ● ● ● ● – ● ● ● – ● – ● ● ● ●

Curaçao and Sint Maarten

United Arab Emirates
United Kingdom
Hong Kong SAR

United States
Uzbekistan
Zimbabwe
Venezuela
Uruguay
Vietnam
Vanuatu
Ukraine
Uganda
Zambia
Tuvalu
Yemen
Aruba
Article VIII ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Article XIV ● Key
Exchange Rate Arrangements Indicates that
the specified
No separate legal tender Ì ◊ practice is
●
Currency board ◊ a feature of
the exchange
Conventional peg ◊ ◊ ◊ ◊ system.
Stabilized arrangement ◊ ◊ Indicates that
Crawling peg data were not
– available at
Crawl-like arrangement ◊ the time of
Pegged exchange rate within publication.
horizontal bands Indicates that
Other managed arrangement * ● the specified
■
practice is not
regulated.
Free floating ● ●
Indicates that
Exchange rate structure the country
Dual exchange rates ● ● ⊕
participates in
Multiple exchange rates ● the euro area.
Arrangements for Payments Indicates that
and Receipts the country
Bilateral payments arrangements – ● ● ● ● ■ ● ● ● participates in
v the European
Payments arrears – ● ■ ● ●
Exchange Rate
Controls on payments for invisible Mechanism
transactions and current transfers – ● ● ■ ● ■ ● ● (ERM II).
Indicates that
transactions
● ● ■ ● ● ● ● flexibility is
Repatriation requirements –
◊ limited vis-à-
Surrender requirements – ● ● ■ ● ● vis the U.S.
Capital Transactions dollar.
Controls on: Indicates that
Capital market securities – ● ● ● ● ■ ● ● ● ● ●
flexibility is
▲
Money market instruments – ● ● ● ■ ● ● ● ● ● limited vis-à-
vis the euro.
Collective investment securities – ● ● ● ● ■ ● ● ● ● ●
Indicates that
Derivatives and other instruments – ● ● ■ ■ ● ● ● ● ● ● flexibility
Commercial credits – ● ● ■ ● ● ● ● ● is limited
Ì
vis-à-vis
Financial credits – ● ● ■ ● ● ● ● ● ● another single
Guarantees, sureties, and financial currency.
backup facilities – ● ● ● ■ ● ● ● ● ●
Indicates that
Direct investment – ● ● ● ● ● ■ ● ● ● ● ● ● flexibility is
○
● ● ■ ● ● ● ● limited vis-à-
Liquidation of direct investment –
vis the SDR.
Real estate transactions – ● ● ● ● ● ■ ● ● ●
Indicates that
Personal capital transactions – ● ● ■ ● ● ● ● ● flexibility is
limited vis-
* à-vis another
institutions – ● ● ● ● ● ● ■ ● ● ● ● ● ● ● ● basket of
currencies.
Institutional investors – ● – ● ● ● ● ■ ● ● ● ● ● ● ●

Country Table Matrix

Article VIII
Article XIV
Exchange Measures
Restrictions and/or multiple currency practices

Exchange measures imposed for security reasons
In accordance with IMF Executive Board Decision No. 144-(52/51)
Other security restrictions
References to legal instruments and hyperlinks
Exchange Arrangement
Currency
Other legal tender
Unitary
Dual
Multiple
Classification
No separate legal tender
Currency board
Conventional peg
Crawling peg
Pegged exchange rate within horizontal bands
Other managed arrangement
Floating
Free floating
Official exchange rate
Monetary policy framework
Exchange rate anchor
Monetary aggregate target
Inflation-targeting framework

Other monetary framework

Exchange tax
Exchange subsidy
Foreign exchange market
Spot exchange market
Operated by the central bank
Foreign exchange standing facility
Allocation
Auction
Fixing
Interbank market
Over the counter
Brokerage
Market making
Forward exchange market
Official cover of forward operations
Arrangements for Payments and Receipts
Prescription of currency requirements

Controls on the use of domestic currency
For current transactions and payments
For capital transactions
Transactions in capital and money market instruments
Transactions in derivatives and other instruments
Credit operations
Use of foreign exchange among residents
Payments arrangements
Bilateral payments arrangements
Operative
Inoperative
Regional arrangements
Clearing agreements
Barter agreements and open accounts
Administration of control
Payments arrears
Official
Private

Controls on trade in gold (coins and/or bullion)

On domestic ownership and/or trade
On external trade
Controls on exports and imports of banknotes
On exports
Domestic currency
Foreign currency
On imports
Domestic currency
Foreign currency
Resident Accounts
Foreign exchange accounts permitted

Held domestically
Approval required
Held abroad
Approval required
Accounts in domestic currency held abroad
Accounts in domestic currency convertible into foreign currency
Nonresident Accounts
Foreign exchange accounts permitted

Approval required
Domestic currency accounts
Convertible into foreign currency
Approval required
Blocked accounts
Imports and Import Payments
Foreign exchange budget

Financing requirements for imports

Minimum financing requirements

Advance payment requirements
Advance import deposits
Documentation requirements for release of foreign exchange for imports
Domiciliation requirements
Preshipment inspection
Letters of credit
Import licenses used as exchange licenses
Other
Import licenses and other nontariff measures
Positive list
Negative list
Open general licenses
Licenses with quotas
Other nontariff measures
Import taxes and/or tariffs
Taxes collected through the exchange system
State import monopoly
Exports and Export Proceeds
Repatriation requirements
Surrender to authorized dealers
Financing requirements
Documentation requirements
Letters of credit
Guarantees
Domiciliation
Preshipment inspection
Other
Export licenses
Without quotas
With quotas
Export taxes
Collected through the exchange system

Other export taxes

Payments for Invisible Transactions and Current Transfers
Controls on these transfers

Trade-related payments
Prior approval
Quantitative limits
Indicative limits/bona fide test
Investment-related payments
Prior approval
Quantitative limits
Payments for travel
Prior approval
Quantitative limits
Personal payments
Prior approval
Quantitative limits
Foreign workers' wages
Prior approval
Quantitative limits
Credit card use abroad
Prior approval
Quantitative limits
Other payments
Prior approval
Quantitative limits
Proceeds from Invisible Transactions and Current Transfers

Restrictions on use of funds
Controls on capital transactions

On capital market securities
Shares or other securities of a participating nature
Purchase locally by nonresidents
Sale or issue locally by nonresidents
Purchase abroad by residents
Sale or issue abroad by residents
Bonds or other debt securities
On money market instruments
On collective investment securities


Commercial credits
By residents to nonresidents
To residents from nonresidents
Financial credits
Guarantees, sureties, and financial backup facilities
Outward direct investment
Inward direct investment
Controls on liquidation of direct investment
Sale locally by nonresidents
Controls on personal capital transactions
Loans
Gifts, endowments, inheritances, and legacies
Settlement of debts abroad by immigrants
Transfer of assets
Transfer abroad by emigrants
Transfer into the country by immigrants
Transfer of gambling and prize earnings

Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutions

Borrowing abroad
Maintenance of accounts abroad
Lending to nonresidents (financial or commercial credits)
Lending locally in foreign exchange
Purchase of locally issued securities denominated in foreign exchange
Differential treatment of deposit accounts in foreign exchange
Reserve requirements
Liquid asset requirements
Interest rate controls
Credit controls
Differential treatment of deposit accounts held by nonresidents
Reserve requirements
Liquid asset requirements
Interest rate controls
Credit controls
Investment regulations
Abroad by banks
In banks by nonresidents
Open foreign exchange position limits
On resident assets and liabilities
On nonresident assets and liabilities
Provisions specific to institutional investors
Insurance companies
Limits (max.) on securities issued by nonresidents
Limits (max.) on investment portfolio held abroad
Limits (min.) on investment portfolio held locally
Currency-matching regulations on assets/liabilities composition
Pension funds


Investment firms and collective investment funds
Changes during 2011

Exchange measures
Exchange arrangement
Arrangements for payments and receipts
Resident accounts
Payments for invisible transactions and current transfers
Proceeds from invisible transactions and current transfers
Capital transactions
Provisions specific to the financial sector

Changes during 2012

Exchange measures
Exchange arrangement
Arrangements for payments and receipts
Resident accounts
Payments for invisible transactions and current transfers
Proceeds from invisible transactions and current transfers
Capital transactions
Provisions specific to the financial sector

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Annual Report

Inte r nati o nal M o n e t ar y Fun d

Please send orders to:

Country Chapters on CD-ROM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv

Overall Developments during 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Summary Features of Exchange Arrangements and Regulatory Frameworks

Country Table Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

iii International Monetary Fund | October 2012

Country Chapters on CD-ROM1

iv International Monetary Fund | October 2012

Latvia St. Lucia

v International Monetary Fund | October 2012

vi International Monetary Fund | October 2012

AANZFTA ASEAN–Australia–New Zealand Free Trade Area

vii International Monetary Fund | October 2012

viii International Monetary Fund | October 2012

LIBOR London interbank offered rate

ix International Monetary Fund | October 2012

1 International Monetary Fund | October 2012

Overall Developments during 20117

6 For further information on these resources, see www.imfbookstore.org or www.elibrary.imf.org.

2 International Monetary Fund | October 2012

3 International Monetary Fund | October 2012

Developments in Exchange Arrangements

ments with no separate legal tender, currency board arrangements, pegs

4 International Monetary Fund | October 2012

Monetary Policy Framework

Conventional Aruba Jordan Cape Verde CAEMC Fiji Bhutan

Crawling peg Nicaragua Botswana Bolivia4,5

5 International Monetary Fund | October 2012

Monetary Policy Framework

6 International Monetary Fund | October 2012

Monetary Policy Framework

Source: IMF staff.

7 International Monetary Fund | October 2012

Exchange Rate Arrangements and Monetary Policy Frameworks

8 International Monetary Fund | October 2012

Table 2. Exchange Rate Arrangements, 2008–12

Exchange Rate Arrangements 20082 20093 20104 2011 2012

Source: AREAER database.

Table 3. Changes and Resulting Reclassifications of Exchange Rate Arrangements, 2011–12

Previous Arrangement in the

9 International Monetary Fund | October 2012

Previous Arrangement in the

10 International Monetary Fund | October 2012

Previous Arrangement in the

11 International Monetary Fund | October 2012

Previous Arrangement in the

12 International Monetary Fund | October 2012

Previous Arrangement in the

13 International Monetary Fund | October 2012

Previous Arrangement in the

14 International Monetary Fund | October 2012

Table 4. Monetary Policy Frameworks and Exchange Rate Anchors, 2008–12

Other Monetary Inflation

15 International Monetary Fund | October 2012

16 International Monetary Fund | October 2012

Foreign Exchange Interventions