Remarks by Angel Gurría
11 October 2018 - Bali, Indonesia
(As prepared for delivery)
Ministers and Central Bank Governors,
The OECD welcomes the work of the G20 Eminent Persons Group. Its far reaching proposals to reform the global financial architecture and governance provide a lot of food-for-thought on a crucial topic.
Let me focus on the suggested capital flow framework and the role of the OECD Code of Liberalisation of Capital Movements in such a framework. As underlined by the EPG, the OECD Code serves as an aspiration for all countries in terms of capital flow liberalisation, at a pace and sequence in line with each country’s circumstances.
The OECD Code has a crucial role to play in the future of the global financial system. The Code is the only legally binding multilateral instrument to have provided a tried and tested process for international dialogue on capital flow policies. Over the last 50 years, it has consistently supported the long-term goal of full capital account liberalisation, and helped constrain beggar-thy neighbour policies.
The Code is open to all countries and interest in adherence has gained new momentum recently. We are proud that seven non-OECD countries, including three G20 members (Argentina, Brazil, South Africa; the others are Peru, Romania, Bulgaria and Croatia) have requested to adhere to the Code. For two of the G20 countries the examination process will start in October 2018 (South Africa and Brazil). We are also working with other emerging economies. The adherence of more countries to the Code will strengthen the instrument and increase its coverage. In addition, G20 members and other OECD countries are increasingly using the ATFC and the Code as a multilateral platform to discuss capital flow management policies.
But the Code of course also needs to evolve and take new developments into account such as the increased use of macro-prudential measures. This is what the ongoing review of the Code is about. The participation of non-OECD G20 countries in the review will further ensure that the instrument remains strong and relevant. The review has now entered its decision-making phase and our objective is to complete it by mid-2019.
The OECD will continue its productive co-operation with the IMF and G20 members on the best approaches to ensure that countries reap the benefits of free capital movements. The recent notes by the IMF and OECD on how measures introduced by countries are treated under the Institutional View and OECD Code, respectively, are examples of this good co-operation.