Taxes on short-term capital flows like those used in Chile and Slovenia may help control the negative effects of volatile international capital movements. However, these controls have limitations and may not prevent speculative attacks on currencies. The evidence from Chile and Slovenia suggests that these taxes have not significantly reduced capital flow volatility. It is important to have strong banking systems and enforce capital controls effectively to promote financial stability. Opening up to foreign capital should only happen after implementing proper regulations and removing public deposit guarantees to prevent excessive borrowing and risky behavior.