Capital Control Definition
Capital Control means
restriction of the free movement of capital. It consists of measures taken by a
government to limit the flow of foreign capital in and out of the country. The
methods of capital control can be taxes, tariffs, legislation and volume
restrictions. The measures can be applied to various asset classes such as
equities, bonds and foreign exchange trades. The strictest capital controls are
introduced in developing countries, where the capital reserves are lower and
more vulnerable to volatility.