The Seoul summit endorsed "carefully designed macro-prudential measures" for countries that had already exhausted other options, such as adding to their foreign-exchange reserves, or simply letting their exchange rate rise.
Looking ahead, the company highlighted a solid order book for homes and continued support from Help to Buy. "We believe that the market risk in the short to medium term has reduced in the first half of 2014 due to a general underlying economic improvement, the extension of Help to Buy to 2020 and balanced prudential measures to reduce long term risk," the trading statement said.
The framework paper, however, maintains that countries should "give precedence to capital-flow measures that do not discriminate on the basis of residency (such as currency-based prudential measures)" over those that do.
It may thus make sense to treat such prudential measures and capital controls similarly.
Mr Ostry and his colleagues point out that some prudential measures distinguish between local-currency and foreign-currency transactions.
Other prudential measures are being taken within the OCC until the results of the review are available".
But "prudential" measures that limit the exposure of domestic financial institutions to high-risk foreign investments would be a more politically acceptable way of selling co-ordination.American commercial-bank investments fuelled financial instability in Latin America in the 1980s, for example, and also left American money-centre banks on the brink of insolvency.
"This will confront the Bank of England with a dilemma: whether to raise base rates early, introduce further 'macro prudential' measures, or risk yet another house price boom," he said.
Thus, one possible prudential measure would be to limit (or potentially ban) foreign currency lending to borrowers without foreign currency income.
Summers said he doubted whether these macro-prudential measures would counter policy error and ignorance and he has a point.
One passage, for instance, begins sensibly enough: "A member shall not be prevented from taking measures for prudential reasons, including for the protection of investors, depositors, policy holders or persons to whom a fiduciary duty is owed by a financial service supplier, or to ensure the integrity and stability of the financial system".
