foreign exchange controls
{{Short description|Controls imposed by a government on the purchase/sale of foreign currencies}}
{{More citations needed|date=June 2013}}
File:SA exchange controls 80s.jpg-era South African government to restrict the outflow of capital from the country]]
Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents, on the purchase/sale of local currency by nonresidents, or the transfers of any currency across national borders. These controls allow countries to better manage their economies by controlling the inflow and outflow of currency, which may otherwise create exchange rate volatility. Countries with weak and/or developing economies generally use foreign exchange controls to limit speculation against their currencies. They may also introduce capital controls, which limit foreign investment in the country.
Rationale
{{Foreign Exchange}}
Common foreign exchange controls include:
- banning the use of foreign currency within the country;
- banning locals from possessing foreign currency;
- restricting currency exchange to government-approved exchangers;
- fixed exchange rates
- restricting the amount of currency that may be imported or exported;
Often, foreign exchange controls can result in the creation of black markets in currencies. This leads to a situation where the actual demand for foreign currency is greater than that which is available on the official market. As such, it is unclear whether governments have the ability to enact effective exchange controls.
History
Foreign exchange controls used to be common in most countries. For instance, many western European countries implemented exchange controls in the years immediately following World War II. The measures were gradually phased out, however, as the post-war economies on the continent steadily strengthened; the United Kingdom, for example, removed the last of its restrictions in October 1979. By the 1990s, there was a trend toward free trade and globalization and economic liberalization.
In France, exchange controls started after the First World War. It then reappeared between 1939 and 1967. After a very short interruption, exchange controls were restored in 1968, relaxed in 1984, and finally abolished in 1989.[http://aesplus.net/La-politique-de-change-de-la.html La politique de change de la France des années 1980 ] {{Webarchive|url=https://web.archive.org/web/20111011172729/http://www.aesplus.net/La-politique-de-change-de-la.html |date=2011-10-11 }}, sur aesplus.net (consulté le 1er mai 2011)
Francoist Spain kept foreign exchange controls from the Spanish Civil War to the 1970s.{{cn|date=September 2022}}
Other countries that formerly had exchange controls in the modern period include:
- Argentina - between 2011 and 2015
- Egypt - until 1995
- Finland - until 1990
- Israel - until 1994
- Taiwan - until 1987
- United Kingdom - until 1979[https://www.nytimes.com/1979/10/24/archives/british-abolish-controls-on-foreign-currency-some-outflows-are.html UK Exchange Controls end, New York Times, 24 October 1979] Retrieved 26 September 2018
- Russia - from 1991 until 2006{{cite news |url=https://carnegieendowment.org/russia-eurasia/politika/2023/10/russias-capital-controls-are-designed-to-aid-putins-2024-re-election?lang=en | title=Russia's Capital Controls Are Designed to Aid Putin's 2024 Re-Election }}
= Current examples =
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Today, countries with foreign exchange controls are known as "Article 14 countries", after the provision in the International Monetary Fund's Articles of Agreement, which allows exchange controls only for "transitional economies".
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- Algeria
- Angola
- Argentina{{cite web |title=Argentina Tightens Currency Controls After Fernandez Victory|url=https://www.bloomberg.com/news/articles/2019-10-28/argentina-tightens-currency-controls-after-fernandez-victory| work = Bloomberg News | publisher = Bloomberg L.P. | first1 = Jorgelina | last1 = Do Rosario | first2 = Carolina | last2 = Millan |date=2019-10-28}}
- Armenia
- Bahamas{{cite web |title=Exchange Control Notes and Guidelines - Central Bank of the Bahamas |url=https://www.centralbankbahamas.com/exchange-control-notes-and-guidelines |website=Central Bank of The Bahamas |access-date=13 September 2022}}
- Barbados{{cite web |title=Learn how foreign currency exchange controls work in Barbados |url=https://barbadosdigitalnomads.com/reference/learn-how-foreign-currency-exchange-controls-work-in-barbados |website=Barbados Digital Nomads |access-date=13 September 2022}}
- Belarus{{cite web |title=Individual Provisions of Foreign Exchange Legislation|url=https://www.nbrb.by/engl/Legislation/ForExRegul |date=15 June 2015 |access-date=11 June 2019}}
- Cameroon
- China{{Cite web|url=https://www.trade.gov/knowledge-product/exporting-china-market-overview?section-nav=3169|title=China Commercial Guide | International Trade Administration|website=www.trade.gov}}{{ Cite news | url = https://www.ft.com/content/b69166fa-ee01-11e7-b220-857e26d1aca4 | title = China steps up capital controls with overseas withdrawal cap | work = Financial Times | date = 31 December 2017 | url-access = subscription | last1 = Clover | first1 = Charles | last2 = Mitchell | first2 = Tom }}
- Cuba
- Ethiopia
- Ghana
- India
- Iran
- Libya
- Morocco
- Myanmar
- Mozambique
- Namibia{{cite web |title=Exchange Control Frequently Asked Questions |url=https://www.bon.com.na/Bank/Exchange-Control/Frequently-Asked-Questions.aspx |access-date=18 April 2018 |archive-date=13 April 2019 |archive-url=https://web.archive.org/web/20190413155306/https://www.bon.com.na/Bank/Exchange-Control/Frequently-Asked-Questions.aspx |url-status=dead }}
- Nepal{{cite web |title=Foreign Investment Laws and Regulations in Nepal |url=http://neupanelegal.com/news-publication-details.php?p=MTM= |date=27 September 2012 |access-date=5 May 2015 |archive-date=6 March 2016 |archive-url=https://web.archive.org/web/20160306135612/http://neupanelegal.com/news-publication-details.php?p=mtm= |url-status=dead }}
- Nigeria
- North Korea
- Russia
- Samoa
- South Africa{{cite web |title=Exchange Control Legislation |url=https://www.resbank.co.za/RegulationAndSupervision/FinancialSurveillanceAndExchangeControl/Legislation/Pages/default.aspx |date=27 September 2012 |access-date=25 March 2017}}
- Sudan
- Tunisia
- Ukraine{{cite book |url=https://books.google.com/books?id=UyJYdMjjir4C&q=foreign+exchange+controls+in+Ukraine&pg=PA924 |title=Annual Report on Exchange Arrangements and Exchange Restrictions 1979 - International Monetary Fund - Google Books |date=2000-02-29 |publisher=International Monetary Fund |access-date=2013-06-14 |isbn=9781557758989}}
- Uzbekistan
- Venezuela
- Zimbabwe
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