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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 ...
Whereas central banks can directly control the issuance of physical currency, the question to what extent they can control broad monetary aggregates like M2 by also indirectly controlling the money creation of commercial banks is more controversial. [23]
Prudential capital controls are typical ways of prudential regulation that takes the form of capital controls and regulates a country's capital account inflows. Prudential capital controls aim to mitigate systemic risk , reduce business cycle volatility, increase macroeconomic stability, and enhance social welfare .
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Option (b): An independent monetary policy and free capital flows (but not a stable exchange rate). Option (c): A stable exchange rate and independent monetary policy (but no free capital flows, which would require the use of capital controls). Currently, Eurozone members have chosen the first option (a) after the introduction of the euro.
FDI is the sum of equity capital, long-term capital, and short-term capital as shown in the balance of payments. FDI usually involves participation in management, joint-venture, transfer of technology and expertise. Stock of FDI is the net (i.e., outward FDI minus inward FDI) cumulative FDI for any given period.
Exchange controls such as these were imposed by the South African government to restrict the outflow of capital from the country. The South African financial rand was the most visible part of a system of capital controls. Although the financial rand was abolished in March 1995, some capital controls remain in place.
The agency was established in 2011 to replace the role of Bapepam-LK in regulating and supervising the capital market and financial institutions, as well as that of Bank Indonesia in regulating and supervising banks, and to protect consumers of financial services industry.