Capital account convertibility and Current account convertibility

Capital account convertibility
It means the freedom to convert local financial assets into foreign financial assets and vice versa at market determined rates of exchange.It refers to the removal of restraints on international flows on a country's capital account, enabling full currency convertibility and opening of the financial system. Capital account convertibility is considered to be one of the major features of a developed economy. It helps attract foreign investment.At the same time, capital account convertibility makes it easier for domestic companies to tap foreign markets. It is sometimes referred to as Capital Asset Liberation.
Current account convertibility
Current account convertibility allows free inflows and outflows for all purposes other than for capital purposes such as investments and loans. In other words, it allows residents to make and receive trade-related payments -- receive dollars (or any other foreign currency) for export of goods and services and pay dollars for import of goods and services, make sundry remittances, access foreign currency for travel, studies abroad, medical treatment and gifts, etc.

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