IN RECENT YEARS considerable concern has developed, especially in official circles, over the possible destabilizing effects of international flows of short-term capital. A focal point of this concern has been flows through the Euro-currency markets. In particular, it has been argued that since these markets appear to have had a significant impact on the world money supply, they have been an important source of inflationary pressure; they have reduced domestic monetary independence; and they have been a main source of speculative capital flows and instrumental in the collapse of the Bretton Woods system.1 As a result, many have advocated some form of control over these markets. Most arguments for control of the Euro-currency markets have favored some form of joint or multilateral action, generally joint open market operations, coordinated central bank placements, and uniform reserve requirements on Euro-banks. Although no scheme of multilateral controls has yet been instituted, or even formally proposed the authorities of many countries at times have taken various measures unilaterally in an attempt to insulate their domestic economies from the international repercussions of their domestic policy actions. However, despite the considerable interest in multilateral controls at the policy level, and despite the fairly extensive use of various unilateral controls, there have been few, if any, attempts at the academic level to objectively analyze the likely impact of various forms of control on Euro-currency flows. Hence it is the purpose of this paper to discuss the qualitative (as opposed to quantitative) effects of the imposition of various controls on the basis of a general equilibrium portfolio model of the Euro-dollar market.2 The paper does not concern itself with the question of whether or not there is a case for controls, although clearly the analysis may have important implications for this question. Furthermore, although it is possible to discuss numerous alternative control measures, it was decided to limit attention to certain "representative" multilateral and unilateral controls. In particular, as "representatives" of unilateral controls, the analysis concentrates on the imposition of reserve requirements on bank and nonbank foreign (Euro-dollar) borrowing. As "representatives" of multilateral controls, the imposition of multilateral re-