The OECD has actively promoted progressive liberalisation of current and capital account operations among its members for over 40 years. Since 1961, OECD countries have engaged in the opening of capital accounts, guided by the provisions and implementation procedures embodied in a unique multilateral instrument: the Code of Liberalisation of Capital Movements. While full freedom of capital movements was achieved by most OECD members more than a decade ago, and in some even earlier, new members (Korea, Mexico, Poland, the Czech Republic, Hungary and the Slovak Republic) have only recently attained the same level of liberalisation.

This account of the accumulated OECD experience with capital account liberalisation provides timely and valuable reading for policy makers, academics and financial practitioners alike. Timely, as the debate on the pros and cons of external financial liberalisation by emerging markets is very active at the present juncture. Valuable, because the OECD experience clearly demonstrates the benefits of open capital accounts, as vouched for by the reluctance of its members to resort to restrictions on capital flows -- even in times of financial turmoil.