In the early 1990s, in the context of massive foreign capital inflows, the Chilean government restricted the flow of capital into the country to achieve a competitive and stable exchange rate and to control inflation. By the late 1990s, with the onset of the financial crises in emerging-market economies, investors began to pull their capital out of Chile and other emerging markets indiscriminately. This sudden reversal of capital flows was threatening to ignite a balance-of-payments crisis in Chile. The government had to decide what to do. This B case gives an update to the events that unfolded in the A case ("Chile: A Changed Jungle for the Latin American Tiger (A)" [UVA-BP-0461]) and abridged case ("Chile: A Changed Jungle for the Latin American Tiger (Abridged)" [UVA-BP-0458]).
