But this could be a blessing, allowing the authorities to strengthen local-currency capital markets and address the problem of excessive reliance on foreign currencies.
I calculate that $35 billion to $40 billion (or 8% to 9% of GDP) in hard-currency capital inflows will be needed to keep Russia out of the red this year, even after net foreign exchange reserves are run down to zero.
To prevent speculation against currency pegs, capital flows were severely restricted.
Freed of the need to defend its currency from capital outflows, it was able to loosen monetary policy.
Many economists point to Iceland as a case study of what should be done during an economic crisis: devalue your currency, impose capital controls and avoid excessive austerity.
The exclusion of such crucial items from G-20 monitoring suggests that Beijing has little intention of freeing up its currency or capital account soon.
But efforts to bolster the currency through capital controls, higher duties on some imports and other measures will also hurt the economy and frighten businesses, investors and individuals.
In the 1980s and early 1990s economic progress was completely held back by inflation, a depreciating currency, inefficient capital markets and unemployment.
Malaysia, which flouted the I.M.F.'s prescriptions and imposed strict controls on currency and capital flows, has turned into one of the region's export stars.
Qian's words sum up a sentiment about the changing flow of cultural currency and capital as China, the world's second-largest economy and unapologetic superpower, revises its indiscriminate idolatry of all things Western.
At the same time, and even with currency insurance, capital would continue to stay away from the countries that did not embrace the path to reform, if only because the debt of such countries would still face the risk of bankruptcy (and because what private sector investor wants to invest in a non-reforming country)?
