Remarks by Ángel Gurría
9 June 2019 - Fukuoka, Japan
(as prepared for delivery)
Dear Ministers and Central Bank Governors,
I am glad to announce that OECD Ministers adopted last month the revised OECD Code of Liberalisation of Capital Movements. The Code is the only multilateral agreement dedicated to the management of the full range of cross-border capital flows.
This review is a major achievement. All Code adherents have agreed that an enhanced multilateral framework for managing capital flows is urgently needed and have taken action to make the Code stronger, giving it better governance, transparency, and decision-making capacity, 10 years after the global financial crisis. Let me outline some of the most significant changes that this review has brought forward.
First, the new Code brings together openness and flexibility. Since the crisis, both advanced and emerging economies have made use of a more diverse financial policy toolkit, in part due to large capital inflows and outflows. The revised Code responds to this reality, providing countries with the enhanced flexibility needed to respond to financial stability concerns without diluting the Code’s high standards of openness based on the transparency – accountability – proportionality (“TAP”) trilogy.
Second, its governance has improved with a move to a consensus-minus one voting rule for assessment of country-specific measures, as we have for instance in the Global Forum on Tax Transparency. This will reinforce the Code’s efficacy in the future and is an illustration of effective multilateralism at work.
Third, the new Code is more relevant globally. Its review comes at an interesting time as we are observing a tectonic shift in the geography of capital flow management, with major emerging economies opening up their capital accounts. Following the G20’s call for its non-OECD members to consider adhering to the Code, Brazil, South Africa and Argentina are now in the process of adhering. India and China are gradually moving towards allowing greater capital mobility. Going forward, I hope and trust that all G20 countries will be able to join and rely on the revised Code as they continue opening their economies, following their own domestic policy preferences and circumstances.
Going forward, the revised Code and its advisory body provide a strong platform for multilateral debate and cooperation on capital flow policies. This is crucial in a financially more integrated world with increased capital flow spillovers. It also creates a proper ground to advance consensus and discourage countries from pursuing “beggar-thy-neighbour policies”. With 15 members of the G20 now adherent or in the process of adherence to the Code, the value of this instrument as a global tool for cooperation on capital flow management is clearly demonstrated.
Let me conclude by inviting you all to join me at the high-level policy seminar on capital flows that the OECD is co-organising with the Japanese G20 Presidency on 11 September 2019 at the OECD. Thank you.