The study is devoted to the analysis of theoretical and empirical arguments put forward in the disputes about the application of the instruments to limit the free movement of capital. The importance of the issue has been growing, in particular in the discussions concerning economic policy in the emerging markets. The question as to whether it is possible to benefit from the inflow of capital whilst simultaneously reducing threats arising from it is ever-present.

The analysis has been divided into two parts. The first one considers the advisability of restricting the movement of capital, while the second focuses on the effectiveness of the instruments used to inhibit inflow and outflow of capital. Pros and cons of both problem issues were viewed in the light of Polish circumstances in order to present possible indications for the application of the capital flow controls.

The analysis leads to the important conclusion that the introduction of barriers limiting capital flows in Poland would be neither justified nor effective. Such barriers would not fulfil their purpose because sizeable foreign investments finance domestic investment projects. Such instruments fail to reduce pressure for financial appreciation. The date of Poland's accession to the EU is approaching (along with the requirement for free movement of capital and the need to determine the parity rate), and the need to reform public finance.

In turn, the ineffectiveness of capital flow controls may stem from the fact that its potential advantages (such as the reduction of already insignificant inflow of short-term capital) seem relatively modest compared to its side effects. The disadvantages of such a solution would include: a substantial growth in the cost of capital for small and medium enterprises, and administrative costs connected with the introduction and maintenance of limitations in capital flow.