Foreign exchange control, also known as foreign exchange management, is the management of foreign exchange funds, exports, deposits and loans, and the exchange and exchange rate of domestic currency through laws, decrees and regulations in order to prevent capital flight or outflow, maintain the balance of international payments and stabilize the exchange rate of domestic currency.

It includes capital control.

Apart from Iceland, which countries have capital controls?

First, ensure that Greek funds will not flee. Second, create a legal excuse for further fiscal austerity. Third, implement domestic economic control. Fourth, test the attitude of the West.

Which countries are controlled by the capital account?

Like China.

Will capital control be China's choice?

There are two completely different views on capital control. One view is that capital control only changes the way of capital flow, but does not change its total amount. The strict management of RMB exchange rate shows that China's monetary policy is very important and it is necessary to control the short-term interest rate of RMB. Another view is that although China is currently implementing a limited floating exchange rate system, capital controls are still very binding, which enables China to appropriately adjust short-term interest rates. In the context of the current global financial turmoil, the contrast between the above two views is more vivid. Therefore, people have completely different explanations about the influence of free capital flow. Regarding the free flow of capital, one view is that the liberalization of capital account will reduce the transaction cost, thus changing the cross-border capital flow portfolio, but it does not necessarily affect the total capital flow. Another view is that capital account liberalization will affect the scale and structure of capital flows, and eventually force policymakers to choose between exchange rate management and independent monetary policy. China's monetary policy not only regulates short-term interest rates, but also widely adopts other policy tools, including administrative control of deposit interest rates and minimum loan interest rates, and quantitative adjustment of reserve requirements, loan quotas, window guidance and investment restrictions. These measures give China a lot of room for manoeuvre in monetary policy, even though short-term interest rates are bound by the exchange rate system. We find that the short-term interest rate in China is not strongly restricted, which further illustrates the independence of RMB in a broader sense. This discovery is more in line with the reality of China. China's capital control system has two important features. First of all, the more unstable cross-border capital flows are, the stricter their control is; Secondly, with the passage of time, the management mode has changed from blindly preventing capital outflow to managing the two-way flow of cross-border capital in a more balanced way. For the latter, policymakers prefer "headwind" regulation. China's cross-border capital flows have increased significantly, which shows that China's economy is increasingly open and integrated into the world economy, and the influence from the global market is also expanding. The onshore-offshore currency markets RMB spread is relatively large, and the onshore-offshore currency markets RMB spread cannot disappear through cross-border arbitrage transactions, which shows that capital controls are effective and China's monetary policy is relatively autonomous. China and Hongkong can be regarded as small open economies, which are firmly pegged to the US dollar. The euro zone can be regarded as a large open economy with floating exchange rates. As China continues to implement capital controls, the adjustment of its short-term interest rate seems to be less affected by the United States than Hongkong or the euro zone.

What is capital control capital?

concept

Capital control is a legal restriction on a country's residents to hold and trade foreign currency assets.

origin

The formation of China's concept of capital control is closely related to the process of China's overall economic reform. On February 29th, 1993, 1993, the People's Bank of China issued the Announcement on Further Reforming the Foreign Exchange Management System, placing the reform of the foreign exchange system on the cornerstone of the socialist market economy, and proposing to realize convertibility under the current account as a breakthrough first step. Since then, the concept of capital control has really taken shape. Capital control is crucial to the whole economic reform.

What is mandatory capital control?

* * * Use administrative power and law enforcement power to control a certain aspect or comprehensiveness of society. Generally speaking, only in an emergency will * * * use control means, such as common curfews, military control, media control, air traffic control, and irreversible problems in some factories and operating institutions. Because most controls involve too much, they are sometimes labeled as violating identification, so they are rarely used.

Related effects of capital controls

Capital flow is affected by the capital control implemented by the state. Countries usually have control over the capital flowing into their own countries. For example, a country can impose a special tax on domestic investors' capital gains abroad, forcing domestic investors to stop exporting funds to foreign markets, thus increasing their capital account balance.

What other countries are controlled by capital now? Is China controlled by capital?

This does not seem to be the case. .

Does capital control help China's economy?

Pan, deputy governor of the People's Bank of China and director of the State Administration of Foreign Exchange, recently met with Andrew Rushbath, chairman of the European Monetary Institutional Investor Group, and Toni James, president of Blackstone Group. Pan said that China's current balance of payments situation is basically stable, the risk of cross-border capital flows is generally controllable, and the RMB exchange rate remains basically stable against a basket of currencies, and there is no basis for continuous depreciation. We consider facilitation and risk prevention as a whole. While continuing to vigorously promote trade and investment facilitation, we will strengthen risk prevention and control, highlight the audit requirements of authenticity and compliance, and severely crack down on foreign exchange violations, and will not follow the "old road" of capital control.

Pan pointed out that it is necessary to comprehensively and objectively understand the current economic situation in China. Generally speaking, China's economy is still in a reasonable range. Against the background of slowing growth of world economy and trade and increasing fluctuation of international financial markets, it is very rare for China's economy to maintain a medium-high growth rate of 6.9% in 20 15 years, and this growth rate is achieved on the basis that China's economic aggregate has exceeded 10 trillion dollars, which is still at a high level in the world.

Pan stressed that the change of China's economic growth rate is due to the weak global economic growth and the result of China's active policy adjustment, which is conducive to China's more sustainable and higher-quality growth and global economic rebalancing. In the future, China will focus on strengthening structural reforms, especially supply-side structural reforms, in order to better balance the relationship between economic growth, structural adjustment and risk prevention, achieve sustained and stable economic development, and play an important role in global economic growth and rebalancing.

Can China's capital control prevent capital outflow?

In accordance with the reform principle of "step by step, overall planning, easy before difficult, leaving room", China has gradually promoted capital account convertibility. At the end of 2004, among the 43 special capital transactions identified by the International Monetary Fund, 1 1 is convertible, 1 1 has fewer restrictions, and 15 has more restrictions, and only six are strictly controlled. At present, unless otherwise stipulated in the State Council, foreign exchange income from capital account must be repatriated. Domestic institutions (including foreign-invested enterprises) shall apply to the foreign exchange bureau where they are registered to open a special foreign exchange account at the designated foreign exchange bank for retention. The settlement of foreign exchange capital under foreign investment can be handled directly at the designated foreign exchange bank authorized by the foreign exchange bureau with the corresponding materials, and the foreign exchange income under other capital can be sold to the designated foreign exchange bank only after it is approved by the foreign exchange administration department. Except for some projects of designated foreign exchange banks, the purchase of foreign exchange and external payment under capital projects must be approved by the foreign exchange administration department, and foreign exchange can be sold and paid in banks only with the approval documents. China's foreign exchange management of foreign direct investment has been relatively loose. In recent years, the foreign exchange management of foreign direct investment by domestic enterprises has been continuously relaxed to support enterprises to "go global". Foreign direct investment management: the capital and investment funds of foreign-invested enterprises need to be kept in special accounts; Foreign exchange capital under foreign investment can be directly settled at the designated foreign exchange bank authorized by the foreign exchange bureau with corresponding materials, and foreign exchange income under other capital can be settled after being approved by the foreign exchange bureau; Expenditure under capital of foreign-invested enterprises may be remitted from their foreign exchange accounts or remitted by purchasing foreign exchange upon approval; For the purpose of supervision and management, the foreign exchange registration and annual inspection system is implemented for foreign-invested enterprises. Management of overseas investment: The State Administration of Foreign Exchange is the foreign exchange management organ for overseas investment. If domestic institutions need to purchase foreign exchange for overseas investment, they must report to the local foreign exchange branch (foreign exchange management department) in advance to review the source of foreign exchange funds for investment; All physical investment projects, foreign aid projects and strategic investment projects approved by the State Council are exempt from this review; After the approval of overseas investment projects, domestic investors shall go through the formalities of foreign exchange registration and examination and approval for purchasing foreign exchange and remitting foreign exchange funds at the foreign exchange administration department. The state implements a joint annual inspection system for overseas investment. In terms of securities capital inflow, foreign investors can directly enter the domestic B-share market without approval; Overseas capital can indirectly invest in the domestic A-share market by buying and selling stocks and bonds through qualified foreign institutional investors (QFII). However, the domestic securities investment of qualified foreign institutional investors must be within the approved quota; Upon approval, domestic enterprises can use overseas financing through overseas listing (H shares) or issuing bonds. The management of securities capital outflow is strict and the channels are limited. Except that designated foreign exchange banks can buy and sell overseas non-stock securities and the foreign exchange funds of approved insurance companies can be used overseas with their own funds, other domestic institutions and individuals may not invest in overseas capital markets. At present, individual insurance companies have been approved to use foreign exchange funds to invest in overseas securities markets. In addition, China International Capital Corporation Limited was allowed to carry out pilot financial innovation and foreign exchange asset management business, allowing it to manage foreign exchange assets of domestic customers through special accounts and conduct overseas operations. International development agencies have also begun to issue RMB bonds in China on a pilot basis for foreign debt management: China implements planned foreign debt management, and medium and long-term foreign debts borrowed by financial institutions and Chinese-funded enterprises with a term exceeding 1 year should be included in the national foreign capital utilization plan. Short-term external debt within 1 year (including 1 year) is managed by the State Administration of Foreign Exchange. Foreign-invested enterprises borrow international commercial loans without prior approval, but the sum of their short-term foreign debt balance and accumulated long-term foreign debt should be strictly controlled within the difference between their total investment and registered capital. After borrowing foreign debts, domestic institutions (including foreign-invested enterprises) need to register foreign debts with the foreign exchange bureau on a regular or timely basis. For foreign debts registered one by one, the repayment of principal and interest must be approved by the foreign exchange bureau (except banks). Local governments are not allowed to borrow money from other countries. Commercial paper issued by domestic institutions shall be examined and approved by the State Administration of Foreign Exchange, occupying its short-term loan index. In addition, the deferred payment of domestic institutions 180 days or more and the equivalent of more than 200,000 US dollars or more are included in the foreign debt registration management; Where a multinational company registered in China conducts centralized operation of funds, the funds absorbed by its overseas affiliates are used in China and included in the foreign debt management; Overseas guarantees under domestic loans are included in the foreign debt management according to the performance amount, and the sum of the accumulated long-term and short-term foreign debts of enterprises, the sum of the balance of short-term foreign debts and the performance amount guaranteed by overseas institutions and individuals shall not exceed the difference between their total investment and registered capital. External guarantee management: External guarantee belongs to contingent debt, and its management refers to external debt. ......