In view of the rising possibilities of the financial challenges due to the increase in the rate of capital inflow, the International Monetary Fund is advising the nations to adopt taxations and regulations as the measures to curb the capital surge.

This recommendation comes as the extreme opposite of IMF's earlier recommendations that supported the free flow of capital. This is the fallout of the global economic meltdown.

"We have tried to look at the evidence and tried to learn something from the current crisis", said Jonathan Ostry, IMF's Deputy Director of research

IMF also recommended that the countries should first check the effectiveness of the traditional policies in controlling capital inflows.

It calculated that this year, $722bn of private capital is expected to flow in the developing nations, which shows a 66% increase from 2009.

Columbia University Economist Jagdish Bhagwati, who criticized IMF’s opposition to capital controls during the Asia crisis in the late 1990s, applauded the change. "Better late than never. This is so clearly an area where letting markets rip isn't a good idea”, he said.