Capital Control

Filed Under » ,
Dictionary Says

Definition of 'Capital Control'

Any measure taken by a government, central bank or other regulatory body to limit the flow of foreign capital in and out of the domestic economy. This includes taxes, tariffs, outright legislation and volume restrictions, as well as market-based forces. Capital controls can affect many asset classes such as equities, bonds and foreign exchange trades.

Tight capital controls are most often found in developing economies, where the capital reserves are lower and more susceptible to volatility.
Investopedia Says

Investopedia explains 'Capital Control'

Capital controls are the subject of much debate; some feel that they inherently limit economic progress and efficiency while others see them as prudent, adding a measure of safety to the economy. Most of the largest economies have a liberal policy of capital control, having phased out stricter rules from the past. But most of these same economies have basic stopgap measures in place to prevent against a mass exodus of capital (outflows) during a time of crisis or a massive speculative assault on the currency.

Global factors, like globalization and the integration of financial markets, have contributed to an overall easing of capital controls. Opening up an economy to foreign capital generally allows for companies to have easier access to capital, and can raise overall demand for domestic stocks.

Articles Of Interest

  1.

    Currency Exchange: Floating Rate Vs. Fixed Rate

    Baffled by exchange rates? Wonder why some currencies fluctuate while others are pegged? This article has the answers.

  2. Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.

  3. Broadening The Borders Of Your Portfolio

    Find out what type of international fund might suit your needs, in order to gain exposure to foreign markets.

  4. What Are Central Banks?

    They print money, they control inflation, and much, much more. All you need to know about central banks is here.

  5. The New World Of Emerging Market Currencies

    Take advantage of foreign currency markets without stepping out of your house.

  6. What Is An Emerging Market Economy?

    Emerging markets provide new investment opportunities, but there are risks - both to residents and foreign investors.

  7. What does the law say about non-U.S. citizens buying stocks of U.S. companies? Are there any restrictions?

    The law is very fuzzy on the matter of who may own U.S. securities and for what purpose. The U.S. follows the common law system, which is based on precedent. It evolves to reflect changes in ...

  8. Tariffs

    Tariffs, or customs duties, are taxes imposed on foreign goods and services. In addition to providing a country with additional revenue, tariffs offer protection to domestic producers. Imported ...

  9. Exploring The Current Account In The Balance Of Payments

    Learn how a country's current account balance reflects the country's economic health.

  10. What Is The Balance Of Payments?

    The balance of payments helps countries to track how much money is coming in and how much money is going out. Learn more about BOPs here.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Zomma

    An options greek used to measure the change in gamma in relation to changes in the volatility of the underlying asset.

  2. Yield Elbow

    The point on the yield curve indicating the year in which the economy's highest interest rates occur. The yield elbow is the peak of the yield curve, signifying where the highest interest rates occurred.

  3. Xenocurrency

    A currency that trades in markets outside of its domestic borders.

  4. Wanton Disregard

    A standard of severe negligence. Wanton disregard is a very serious accusation that indicates that a person behaved extremely recklessly.

  5. Ultra ETF

    A class of exchange-traded funds (ETF) that employs leverage in an effort to achieve double the return of a set benchmark.

  6. Toehold Purchase

    A purchase of less than 5% of a target company's outstanding stockmade by an acquiring company. A toehold purchase of just under 5%, while not a significant stake in a firm, allows the shareholders a "toe-holds" grip on the company and its decision making.
Trading Center
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=5dc6195c59790ea9115c3542ebe09ff9