Capital Control

Categories: Finance,

Capital Control meansrestriction of the free movement of capital. It consists of measures taken by agovernment to limit the flow of foreign capital in and out of the country. Themethods of capital control can be taxes, tariffs, legislation and volumerestrictions. The measures can be applied to various asset classes such asequities, bonds and foreign exchange trades. The strictest capital controls areintroduced in developing countries, where the capital reserves are lower andmore vulnerable to volatility.