Why should (or should not) a university have a policy of not hiring its own PhDs? My university (in France) is having a debate about the relevance of taking rules for preventing too many of its PhDs to be recruited here, or asking them to have some postdoc outside the region before. The same rules are also debated about the promotion to full professor (from what is called maître de conférence and is a tenured associate professorship).

Many people have strong opinion on these issues (me included), and I would like to gather a comprehensive list of arguments (in both directions) on this matter, if only to clear my ideas.

Some arguments may apply only under particular circumstances or in specific fields, please say so when it applies.
I have not come far in my career but I have a family of academics, this question certainly came up a number of times over the years. 

I guess the main point of having a formal requirement of foreign exchange/post-doc period is two-folds: 


to avoid the drawbacks of academic inbreeding. Academia is partially built on a strong tutor-pupil, or rather mentor-protégé, relationship. While this is a great way to pass on the experience and good skills, it can also be the cause of conservatism in the form of sticking to what you know only. Likewise it's truly important for young academics to experience different cultures, and I don't mean it like a charter trip to a warm place, only to hang out with friends/family. To learn, adapt and eventually appreciate a foreign culture is beneficial for any person, let alone for those who are supposed to keep an open mind to the unknown.
going to a new lab somewhere else is also a fantastic way to improve on your professional skills. It's another reason why young academics are often expected to go somewhere else, learn something new and overall improve intellectually. In the corporate world this is encouraged in terms of changing jobs, those prodigies who are groomed for high level executive positions usually end up switching jobs every 3-5 years, often taking on a new but not completely unfamiliar role. 


I should also note that our department has a similar issue, in the form of internal recruiting. A significant portion of the PhDs are recruited from those who have taken the course our department gives for undergrads in a particular program. What that leads to then is that the department becomes more or less an alumni hangout. While it may be nice for those new recruits to feel more "at home", for anyone else who does not have the same background it creates a BIG barrier to overcome in order to get familiar with the people in the department.

That was my two cents, I hope it helps.