Foreign exchange controls

Rationale

Common foreign exchange controls include:

• banning the use of foreign currency within the country;
• banning locals from possessing foreign currency;
• restricting currency exchange to government-approved exchangers;
• fixed exchange rates
• restricting the amount of currency that may be imported or exported;

Often, foreign exchange controls can result in the creation of black markets in currencies. This leads to a situation where the actual demand for foreign currency is greater than that which is available on the official market. As such, it is unclear whether governments have the ability to enact effective exchange controls.

History

Foreign exchange controls used to be common in most countries. For instance, many western European countries implemented exchange controls in the years immediately following World War II. The measures were gradually phased out, however, as the post-war economies on the continent steadily strengthened; the United Kingdom, for example, removed the last of its restrictions in October 1979. By the 1990s, there was a trend toward free trade and globalization and economic liberalization.

In France, exchange controls started after the First World War. It then reappeared between 1939 and 1967. After a very short interruption, exchange controls were restored in 1968, relaxed in 1984, and finally abolished in 1989.

Francoist Spain kept foreign exchange controls from the Spanish Civil War to the 1970s.

Other countries that formerly had exchange controls in the modern period include:

• Argentina - between 2011 and 2015
• Egypt - until 1995
• Finland - until 1990
• Israel - until 1994
• Taiwan - until 1987
• United Kingdom - until 1979
• Russia - from 1991 until 2006

Current examples

Today, countries with foreign exchange controls are known as "Article 14 countries", after the provision in the International Monetary Fund's Articles of Agreement, which allows exchange controls only for "transitional economies".

• Algeria

• Angola

• Argentina

• Armenia

• Bahamas

• Barbados

• Belarus

• Cameroon

• China

• Cuba

• Ethiopia

• Ghana

• India

• Iran

• Libya

• Morocco

• Myanmar

• Mozambique

• Namibia

• Nepal

• Nigeria

• North Korea

• Russia

• Samoa

• South Africa

• Sudan

• Tunisia

• Ukraine

• Uzbekistan

• Venezuela

• Zimbabwe

References

References

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2. [https://www.nytimes.com/1979/10/24/archives/british-abolish-controls-on-foreign-currency-some-outflows-are.html UK Exchange Controls end, New York Times, 24 October 1979] Retrieved 26 September 2018
3. "Russia's Capital Controls Are Designed to Aid Putin's 2024 Re-Election".
4. (2019-10-28). "Argentina Tightens Currency Controls After Fernandez Victory". Bloomberg L.P..
5. "Exchange Control Notes and Guidelines - Central Bank of the Bahamas".
6. "Learn how foreign currency exchange controls work in Barbados".
7. (15 June 2015). "Individual Provisions of Foreign Exchange Legislation".
8. "China Commercial Guide | International Trade Administration".
9. (31 December 2017). "China steps up capital controls with overseas withdrawal cap". Financial Times.
10. "Exchange Control Frequently Asked Questions".
11. "Foreign Direct Investment (FDI) Approval Process in Nepal".
12. (27 September 2012). "Exchange Control Legislation".
13. (2000-02-29). "Annual Report on Exchange Arrangements and Exchange Restrictions 1979 - International Monetary Fund - Google Books". International Monetary Fund.