Capital control | EPFL Graph Search

Are you an EPFL student looking for a semester project?

Work with us on data science and visualisation projects, and deploy your project as an app on top of GraphSearch.

Capital controls are residency-based measures such as transaction taxes, other limits, or outright prohibitions that a nation's government can use to regulate flows from capital markets into and out of the country's capital account. These measures may be economy-wide, sector-specific (usually the financial sector), or industry specific (e.g. "strategic" industries). They may apply to all flows, or may differentiate by type or duration of the flow (debt, equity, or direct investment, and short-term vs. medium- and long-term). Types of capital control include exchange controls that prevent or limit the buying and selling of a national currency at the market rate, caps on the allowed volume for the international sale or purchase of various financial assets, transaction taxes such as the proposed Tobin tax on currency exchanges, minimum stay requirements, requirements for mandatory approval, or even limits on the amount of money a private citizen is allowed to remove from the country. There have been several shifts of opinion on whether capital controls are beneficial and in what circumstances they should be used. Capital controls were an integral part of the Bretton Woods system which emerged after World War II and lasted until the early 1970s. This period was the first time capital controls had been endorsed by mainstream economics. Capital controls were relatively easy to impose, in part because international capital markets were less active in general. In the 1970s, economic liberal, free-market economists became increasingly successful in persuading their colleagues that capital controls were in the main harmful. The US, other Western governments, and multilateral financial institutions such as the International Monetary Fund (IMF) and the World Bank began to take a critical view of capital controls and persuaded many countries to abandon them to facilitate financial globalization.

About this result

This page is automatically generated and may contain information that is not correct, complete, up-to-date, or relevant to your search query. The same applies to every other page on this website. Please make sure to verify the information with EPFL's official sources.

Related concepts (33)

Related lectures (3)

Impossible trinity

The impossible trinity (also known as the impossible trilemma or the Unholy Trinity) is a concept in international economics and international political economy which states that it is impossible to have all three of the following at the same time: a fixed foreign exchange rate free capital movement (absence of capital controls) an independent monetary policy It is both a hypothesis based on the uncovered interest rate parity condition, and a finding from empirical studies where governments that have tried

Capital control

Fixed exchange rate system

A fixed exchange rate, often called a pegged exchange rate, is a type of exchange rate regime in which a currency's value is fixed or pegged by a monetary authority against the value of another currency, a basket of other currencies, or another measure of value, such as gold. There are benefits and risks to using a fixed exchange rate system. A fixed exchange rate is typically used to stabilize the exchange rate of a currency by directly fixing its value in a predetermined ratio to a different, more stable, or more internationally prevalent currency (or currencies) to which the currency is pegged.

Exchange Arrangements and Restrictions FIN-523: Global business environment

Delves into the 2021 IMF report on exchange arrangements and restrictions, exploring various exchange rate systems and the effects of fiscal policies.

Controlled Stochastic Processes MGT-484: Applied probability & stochastic processes

Explores controlled stochastic processes, focusing on analysis, behavior, and optimization, using dynamic programming to solve real-world problems.

Medical Devices Regulation: Market Authorization and Compliance BIO-455: Introduction to law and ethics

Explores the regulation of medical devices in Europe, covering market authorization, risk classification, conformity assessment, and post-market surveillance.