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Top 6 Countries Enforcing Capital Controls

In the financial world, consumers are often tricked into believing they can exert control over their money at any given time. That is far from the case, as a lot of regions actively enforce capital controls to reduce the amount of money leaving the national economy. Below is a brief overview of some countries actively enforcing these controls to this very day

6. Brazil

Most people know Brazil as the home of excellent football and the Samba. Unfortunately, the local economy has been struggling for several years now, and hyperinflation is a real threat in Brazil. As of 2009, the Brazilian government enforces capital controls to ensure enough money remains in local hands. Foreigners who purchase financial Brazilian assets must pay a tax to do so. This somewhat makes the country less appealing to international investors, though.

5. Indonesia

Although quite a few people travel to Indonesia every year, the country is not as open-minded toward foreigners as one might think. To be more precise, there are some capital controls going on in the country which make the financial situation more complicated than need be. It is required to go through a one-month minimum holding period for specific securities traded in Indonesia. This is done to counter day trading, yet it also forces investors to be very sure about how they want to diversify their portfolio.

4. Taiwan

Taiwan has been feeling the effects of the 2008 financial crisis. In fact, that crisis could not have come at a worse time for Taiwan, as things were already looking bad years prior. In 2010, government officials saw no other choice but to limit access to certain bank deposits for foreign investors. Once again, this form of capital control will limit the amount of foreign money entering the economy. For a country that needs economic growth more than ever, this measure seems to have the opposite effect.

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3. Russia

Living in Russia, of all places, is not all that appealing to foreigners. That is only understandable, as the country’s government seems to favor isolationism and capital controls. The latest iteration of those controls revolves around forcing state-run exporting companies to bring their forex assets back to the October 2015 levels. Additionally, all companies must report to the central bank every single week. More severe capital control measures are still on the horizon, depending on how the Ruble value evolves over the next few months.

2. Argentina

When one talks about a country dealing with hyperinflation, Argentina will come to mind rather quickly. Strict capital controls have been apparent since 2011. Using foreign exchange reserve to make international payments is no longer an option. Instead, all exporting companies need to repatriate all of their export earnings back to the national economy. Buying US dollars in Argentina is curbed as well, and non-residents have limited access to Argentine Pesos. All bank customers have their tax identification numbers submitted to the federal tax agency as well. Some of these rules have been softened since 2014, yet they are still in effect to this very day.

1. China

Anyone who has been following financial news over the past few years has heard about China’s capital control measures. Buying gold and foreign currency is very limited for both consumers and enterprises. Using the gambling hub of Macau to bypass these controls is no longer a viable option either, as that corridor has been closed. New controls have been imposed since the end of 2015, including the addition of specific conditions to futures contracts. Cross-border money movements are being monitored closely as well, ensuring no one has an easy time getting money out of the country. Shorting the Chinese Yuan as an international investor is met with aggressive currency intervention. So far, very few of these measures have proven to be successful, though.

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JP Buntinx

JP Buntinx is a FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers, and he aims to achieve the same level of respect in the FinTech sector.

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