Question
What is the difference between partial and full capital
account convertibility?Solution
Partial capital account convertibility: In this type of capital account convertibility, certain categories of transactions are allowed, while others are restricted. For example, a country may allow foreign direct investment and portfolio investment but restrict the repatriation of capital or the issuance of foreign currency-denominated debt. Full capital account convertibility: In this type of capital account convertibility, all categories of transactions are allowed without any restrictions. This means that individuals and institutions are free to move their money in and out of the country without any limitations.
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