Introduction

An important feature of the international financial code of conduct established in the Bretton Woods Conference toward the end of World War II was the acceptability of controls and restrictions on international capital flows. In particular, the Articles of Agreement of the International Monetary Fund, which contain such code of conduct, prescribe that:

There was logic at the time of the drafting and acceptance of the Articles of Agreement in including this feature into the rules of the game that were to govern international transactions. The flow of trade, current and capital account exchanges among countries, had been disrupted prior to and during the hostilities; capital movements had not become yet a pre- dominant force in the international transaction network; and for purposes of reconstruction and the resumption of normality in the world economy, encouragement of international trade and exchange became essential. Consequently, attention concentrated on the liberalization of trade and other current account flows, an aim that became enshrined in the Articles of Agreement of the International Monetary Fund.