Capital account convertibility is a feature of a nation's financial regime that centers on the ability to conduct transactions of local financial assets into foreign financial assets freely and at country determined exchange rates. It is sometimes referred to as capital asset liberation or CAC.
In layman's terms, full capital account convertibility allows local currency to be exchanged for foreign currency without any restriction on the amount. This is so local merchants can easily conduct transnational business without needing foreign currency exchanges to handle small transactions. CAC is mostly a guideline to changes of ownership in foreign or domestic financial assets and liabilities. Tangentially, it covers and extends the framework of the creation and liquidation of claims on, or by the rest of the world, on local asset and currency markets.
Read more about Capital Account Convertibility: History, Tenets, Application, Controversy
Famous quotes containing the words capital and/or account:
“The great dialectic in our time is not, as anciently and by some still supposed, between capital and labor; it is between economic enterprise and the state.”
—John Kenneth Galbraith (b. 1908)
“Placing too much importance on where a child goes rather than what he does there . . . doesn’t take into account the child’s needs or individuality, and this is true in college selection as well as kindergarten.”
—Norman Giddan (20th century)