CAPITAL CONTROL

Any preventive actions taken by a central bank, government or other administrative body to control the movement of foreign capital out and in of the domestic economy. This includes volume restrictions, taxes, outright legislation, tariffs as well as market-based forces. This term can affect many asset types such as foreign exchange trades, equities and bonds.

Strict capital controls are most commonly found in emerging economies, where the capital reserves are lesser and more prone to inconstancy.

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