Define: Capital Control

Capital Control
Capital Control
Full Definition Of Capital Control

Capital control refers to the regulation and restriction imposed by a government on the movement of capital, including currency, investments, and financial assets, in and out of a country. These controls are typically implemented to maintain stability in the domestic economy, protect the national currency, and prevent excessive capital outflows that could lead to economic instability. Capital controls can include measures such as limits on foreign exchange transactions, restrictions on foreign investments, and requirements for approval or reporting of capital movements. The legality and effectiveness of capital controls vary among jurisdictions and are subject to international trade and investment agreements.

Capital Control FAQ'S

Capital control refers to measures taken by a government to regulate the flow of capital in and out of a country.

Answer: Governments impose capital control to stabilise their economy, prevent capital flight, and protect their currency from devaluation.

Answer: The types of capital controls include exchange controls, transaction taxes, quantity controls, and prudential controls.

Yes, capital controls are legal and are often used by governments to manage their economies.

Yes, capital controls can be challenged in court if they violate international trade agreements or domestic laws.

Bypassing capital controls is illegal and can result in penalties or fines.

Yes, capital controls can be lifted when the government deems it necessary or when the economy stabilises.

Capital controls can affect foreign investors by limiting their ability to invest or repatriate their funds.

The effectiveness of capital controls in managing the economy varies depending on the specific measures taken and the economic conditions of the country.

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This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.

This glossary post was last updated: 23rd April 2024.

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