South Korea has raised the prospect of introducing a new raft of capital controls as it wrestles with surging investment flows.
The measures would bring Asia’s fourth-biggest economy in line with defensive policies adopted in Brazil, Thailand and Indonesia.
Kim Choong-soo, central bank governor, did not specify what action Seoul was considering but suggestions from officials include a “Tobin” tax on foreign exchange transactions, a tax on capital flows, further limits on derivative positions and, most controversially, the reintroduction of a 14 per cent withholding tax on foreign bondholders’ earnings. “Regulation of capital flows can be an effective policy tool,” the governor said.