The Banking Executive Magazine - May 2021

INTRODUCTION Capital control is the set of measures taken by a government, central bank, or other regulatory body to limit the flow of foreign capital in and out of the domestic economy. In this article, we consider various case studies of capital control from around the world during the financial crisis in the Eurozone. Countries considered are Cyprus, Greece, Iceland, Italy and Spain. The article concludes with a wrap up and lessons learned. CAPITAL CONTROL MEASURES There two broad categories of capital control: • Capital outflow control: This in- volves policies to restrict the ability of domestic citizens to acquire for- eign assets. • Capital inflow control: This in- volves policies to limit foreigners' ability to buy domestic assets. Capital control may limit economic progress and efficiency but is consid- ered as a way to increase the eco- nomic safety. Most of the world's largest economies have liberal capi- tal control policies. Capital Control CAPITAL CONTROL CASE STUDIES FROM AROUND THE WORLD the BANKING EXECUTIVE 8 ISSUE 149 MAY 2021 BY DR SOHA MAAD