Capital Control

Capital control refers to monetary policies used by central governments to control the flow of investment capital into and out of a country. Capital controls are mostly found in developing countries, where they help to provide stability in economies that otherwise might be especially vulnerable to the forces of international capital movement.

The International Monetary Fund, however, has encouraged these companies to loosen their control over the flow of capital into and out of their countries. Some economists argue that capital control is still useful for smaller economies, and some countries (such as Malaysia) have actually tightened their capital control in the wake of the Asian currency crisis of the late 1990s