The Liverpool defender, who came through the youth ranks on Merseyside alongside captain Steven Gerrard, believes provided young English players are given the chance to prove themselves, then bringing in foreign youngsters should be allowed.
Since Chelsea were banned from signing any players in the next two transfer windows after their swoop for former Lens striker Gael Kakuta, Manchester United and Manchester City have also been accused of tapping-up hot prospects.
Carragher feels it is up to the governing bodies to define what is allowed and what is breaking the rules.
"As long as the clubs aren't breaking the rules, there's not a lot that you can say," he told Sky Sports News.
Rules"Those are the rules and if you can get players from abroad very cheap who are very good then you can't say no if you think it's going to improve your first-team in the future.
"But as long as the clubs aren't breaking the rules. I think it's up to Fifa or Uefa if they want to change the rules but as long as the clubs can hold their heads up high and know that they've done nothing wrong then that's the main thing."
The Reds fans' favourite also praised the youth set-up at Anfield, and said the Scouse core of the team that Liverpool currently have will always continue.
"The more people you bring in will obviously make it a little more difficult but I think the spirit and the quality that we've got at Liverpool, I'm sure it will come through in the end," he added.
"We've got it now (a Scouse core). I think hopefully so, we've still got it at the moment. Hopefully for a few more years and when me and Stevie finish, there'll be more coming through."