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Removal or Exchange Controls (Capital Account Liberalization) benefits and costs - Essay Example

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Removal or Exchange Controls (Capital Account Liberalization) benefits and costs

As seen in various world examples like by UK and Australia, these controls are abandoned to gain some economic growth (Encyclopedia Britannica, 2008). However some recent experiences show that these benefits come at a price. Let's discuss some of these benefits and costs.
As seen from the explanation of the benefits and the costs, removal of exchange controls has been very popular for countries however some nations have suffered due to implementation of Capital Account Liberalization. To reap the benefits, a country must adopt the correct policies to support the liberalization and constantly monitor the economic situation of a country in case something goes wrong. ...Show more

Summary

When we talk about exchange controls, we mean "regulation at government level of money-flows in and out of a country" (Carew, 1996). The country and its people can invest into foreign currencies and hold them in national accounts (Neely, 1999). These exchange controls "may restrict investments by residents overseas and non-residents' investments and participation in the local market" (Carew, 1996)…
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Removal or Exchange Controls (Capital Account Liberalization) benefits and costs essay example
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