Remarks by Angel Gurría
18 March 2017
(As prepared for delivery)
Dear Ministers and Governors,
I am very pleased to report on recent developments related to the OECD Code of Liberalisation of Capital Movements. I will be brief. You will find further details in the two-page note we provided you for this meeting.
As you probably know, the OECD Code is the sole multilateral agreement among state parties, signed by 34 OECD and 12 G20 members, aimed at ensuring openness, accountability and transparency in cross-border capital flow policies.
Since its inception in 1961, the Code has served as a platform to get international recognition for reform efforts, compare progress toward openness, and exchange good practices among Adherents; while providing flexibility to maintain or reintroduce capital flow restrictions in light of specific circumstances - provided the latter are regularly reviewed by policy-makers to ensure that restrictions are not maintained longer and more restrictive than necessary.
It has thereby served as a “conflict avoidance” device and an anchor for countries’ policies in times of financial turmoil, by providing a due process – the transparency, accountability and proportionality “trilogy” - to observe when Adherents reintroduce capital flow restrictions while wishing to signal their continued commitment to openness.
We believe that the Code is an extremely relevant international instrument in a worrying context characterized, since 2008, by rising capital flow measures - often in the form of currency-based restrictions - together with a decrease in financial openness (according to OECD indicators).
The Code is also fully consistent with the 2011 G20 Coherent Conclusions. While different in nature and purpose, the OECD and the IMF’s institutional views are complementary and do not create conflicting requirements.
The Code is currently under review and the G20 IFA Working Group has been continuously updated on progress. High-level meetings have been co-organized by the OECD and the German Presidency in October last year and in February this year to inform G20 members about the Code and deepen the understanding of the operations of the Code.
A key area of ongoing consideration includes developing understandings on the treatment of capital flow measures with stated prudential objectives, keeping in mind that commonly used macro-prudential tools typically fall outside the scope of the Code.
All G20 members are invited to continue to participate actively in the review of the Code.
I wish to encourage non-OECD G20 countries to consider declaring their intention to start the adherence process to the Code as soon as possible and wish to thank Minister Schauble for his support in this area.