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Foreign exchange control

cashbackforexpipcalculator cashback forex calculator Online cashbackforexcalculatorOnline (ForeignExchangeControl) is a government to balance the balance of payments cashbackforexprofitcalculator maintain the exchange rate of the national currency and the foreign exchange in and out of the implementation of restrictive measures in China also known as foreign exchange management a government by decree on the international settlement and foreign exchange trading restrictions of a restriction on imports of international trade policy foreign exchange control is divided into quantity control and cost control The former refers to the state foreign exchange management agency to foreign exchange trading quantity directly to limit and allocate, by controlling the total amount of foreign exchange to achieve the purpose of limiting exports; the latter refers to, the state foreign exchange management agency to foreign exchange trading to implement the complex exchange rate system, the use of foreign exchange trading cost differences, adjust the concept of import commodity structure Foreign exchange control has a narrow sense and a broad sense of the narrow sense of foreign exchange control refers to a countrys government to residents in the current account of Foreign exchange control in the broad sense refers to a governments restrictive management of the activities of residents and non-residents involving foreign exchange inflows and outflows Foreign exchange control is carried out in accordance with the countrys laws, government policies and various rules and regulations Foreign exchange control is carried out by the central bank authorized by the government, the Ministry of Finance or other specialized agencies, such as the Foreign Exchange Bureau Foreign exchange control is aimed at Natural and legal persons are usually classified as residents and non-residents, and the foreign exchange control regulations of each country are usually more stringent for residents and less stringent for non-residents. The foreign exchange control objects include foreign banknotes and coins, foreign currency payment certificates, foreign currency securities and gold; some cashback forex also involve silver, platinum and diamonds. Foreign exchange control regulations may not apply to special zones, and the extent of foreign exchange controls in a country may vary from country to country. Foreign exchange controls target activities involving foreign exchange receipts and payments, foreign exchange purchases and sales, international borrowing and lending, foreign exchange transfers and uses; the determination of the exchange rate of the countrys currency; the convertibility of the countrys currency; and the cross-border movement of local currency and gold and silver. Price control and quantity control two types: the former refers to the exchange rate of the local currency to make a variety of restrictions, the latter refers to foreign exchange ration control and foreign exchange settlement control Foreign exchange control mainly has three ways: 1, quantitative foreign exchange control 2, cost foreign exchange control 3, mixed foreign exchange control agencies are generally authorized by the government Ministry of Finance, the Central Bank or another specialized agency set up as the implementation of foreign exchange control agencies such as the 1939 British After the implementation of foreign exchange control designated the British Ministry of Finance as the authority to decide foreign exchange policy, the Bank of England on behalf of the Ministry of Finance to implement specific measures of foreign exchange control, Japan by the Ministry of Finance is responsible for foreign exchange control work; Italy set up a special agency for foreign exchange control - Exchange Control Bureau In addition to the official agencies, some countries also designated by their central banks some large commercial banks as the designated bank to operate foreign exchange business, and according to Foreign exchange control decree centralized all foreign exchange business object Divided into two kinds of people and things to people including legal persons and natural persons according to legal persons and natural persons in the foreign exchange control country inside and outside the different divided into residents and non-residents of residents and non-residents of foreign exchange control treatment is different because the residents of foreign exchange expenditure involves the balance of payments of the country of residence, so the control is more stringent; the control of non-residents is wider to the control of things mainly Involves international means of payment such as currency, mint, gold, securities and notes and other basic ways I. The control of foreign exchange earnings on exports In the export of foreign exchange control, the most stringent provisions is that the exporter must be all foreign exchange earnings according to the official exchange rate settlement to the designated bank exporters in the application for export licenses, to fill in the price of export commodities, quantity, settlement currency, payment methods and payment terms, and delivery of letters of credit II. The control of imported foreign exchange The control of imported foreign exchange is usually manifested as the importer only to get the approval of the management of foreign exchange authorities, to buy a certain amount of foreign exchange in the designated bank management of foreign exchange authorities according to the import license to decide whether to approve the importers application to buy foreign exchange some countries will import the approval of foreign exchange procedures and the issuance of import licenses at the same time for three. Non-trade foreign exchange control Non-trade foreign exchange involves in addition to trade income and expenditure and capital export income other than a variety of foreign exchange income and expenditure on non-trade foreign exchange income control similar to the control of export foreign exchange income, that is, the relevant units or individuals must be all or part of the foreign exchange income and expenditure according to the official exchange rate settlement to the designated bank in order to encourage people to obtain non-trade foreign exchange income, governments may implement some other measures, such as the implementation of Foreign exchange retention system, allowing residents to personal labor income and carry in money in foreign exchange designated banks to open foreign exchange accounts, and exempt from interest income tax IV. Foreign exchange controls on capital importation Developed countries take measures to restrict capital importation usually to stabilize financial markets and exchange rates, to avoid capital inflows causing excessive international reserves and inflation. Foreign exchange control on capital export Developed countries generally adopt the policy of encouraging capital export, but they also adopt some policies to restrict capital export in specific periods, such as facing a serious deficit in the balance of payments, the main measures include: the maximum amount of foreign loans to banks; restrict the country and sector of foreign investment by enterprises; interest balance tax on foreign investment by residents, etc. Control of gold, cash export and import The countries that implement foreign exchange control generally prohibit individuals and enterprises from carrying, consigning or mailing gold, platinum or silver out of the country, or limit the amount of their exit For the import of the countrys cash, the countries that implement foreign exchange control often implement a registration system, stipulate the limit of import and require the use of the specified purpose For the export of the countrys cash is approved by the foreign exchange control agencies, stipulating the corresponding The country that does not allow the free exchange of currency prohibits the export of the countrys cash VII. The price control of foreign exchange is bound to form a de facto variety of complex exchange rate system complex exchange rate system refers to a countrys regulations and government actions lead to the existence of two or more types of exchange rates between the countrys currency and the currency of other countries according to the content and stringency of foreign exchange control is generally divided into three types: ① the implementation of strict foreign exchange control of countries and regions the typical characteristics of such countries is the extreme lack of foreign exchange ① countries and regions with strict foreign exchange controls, which are typically characterized by an extreme shortage of foreign exchange, underdeveloped economies or backward foreign trade, such as most developing countries and countries with centrally planned economies ② countries and regions with partial foreign exchange controls, which do not control the processing of foreign exchange payments for current items by non-residents, but impose restrictions on capital items, such as some developed countries or developing countries with a high degree of openness ③ countries that have nominally abolished but are still implementing foreign exchange controls to varying degrees as of In 1991, there were more than 20 countries of this type, mainly industrially developed countries and oil-exporting countries Pros and cons The advantage of implementing foreign exchange control is that the government can achieve the balance of payments, exchange rate stability, prize outbound and inbound and stable domestic prices and other policy objectives through certain control measures. The disadvantage is that the market mechanism does not play its full role, due to the artificial regulation of the exchange rate or other obstacles, not only to cause domestic price distortion and inefficient allocation of resources, but also to hinder the normal interaction of the international economy. Market equilibrium exchange rate for developing countries, exchange rate distortions mainly in the local currency exchange rate is too high this may be due to the government for the local currency provides a high official quotation, but also may be due to the government imposed restrictions on foreign exchange supply and demand results of this distortion of the exchange rate has a negative impact on the allocation of resources first, it will hit the agriculture of developing countries in the developed countries generally to provide huge subsidies for agricultural exports, the world The overvaluation of the local currency exchange rate further reduces the local currency price of imported agricultural products, which in turn reduces the price of agricultural products in developing countries, which is an important reason for the slow development of agriculture in many developing countries and the large urban-rural disparity. Finally, from a global perspective, the exchange rate is one of the price signals guiding international capital flows, and the distortion of the exchange rate makes it difficult for people to make correct investment decisions. To a certain extent, it affects the development of international trade and the process of opening up to the outside world. From a worldwide perspective, foreign exchange control hinders the formation of a free multilateral settlement system, which naturally hinders the normal conduct of international trade and international capital flows. The development of trade restricts capital outflow and restricts the return of investment returns will also discourage foreign investment in the country The experience of many countries proves that to break the vicious circle between balance of payments deficit, insufficient foreign exchange reserves, foreign exchange control, low degree of openness to the outside world and slow economic development, it is necessary to find a breakthrough in the gradual abolition of foreign exchange control 3. the emergence of foreign exchange black market, and the coexistence of foreign exchange official prices and black market May bring power and money transactions When the foreign exchange price is significantly depressed, it is difficult to avoid the emergence of foreign exchange black market When the black market is large, the government even had to open the foreign exchange transfer market, so that the country has a legal two-track exchange rate In order to buy foreign exchange at a lower official price, certain individuals and enterprises may hold the foreign exchange rationing power of officials to pay bribes to promote the culture of social corruption For the long-term development of the world economy For the long-term development of the world economy, it is a historical trend for countries to gradually relax and eventually abolish foreign exchange controls, but this will be a very long process especially for developing countries that need to implement a certain degree of foreign exchange controls because their economic development level is low, there are many defects in the economic structure, and the government lacks sufficient economic strength to use economic instruments to regulate economic operations in the contemporary international financial market, which is flooded with lobbying capital. The market mechanism itself also has significant defects, completely listening to the market spontaneous regulation is not the optimal choice of countries foreign exchange control is a double-edged sword, it can produce both positive effects, but also can bring negative effects developing countries are faced with the problem of what kind of foreign exchange control in what circumstances, in what conditions to cancel a certain foreign exchange control, and how to use the positive effects of foreign exchange control as far as possible, to avoid or reduce The purpose of the possible negative effects of foreign exchange controls is to promote balance of payments or improve the balance of payments situation. Fiscal policy or monetary policy may improve the balance of payments, but it will affect the speed of economic development and worsen unemployment.2 Stabilize the exchange rate of the local currency and reduce foreign exchange risk in foreign economic activities. For developing countries lacking foreign exchange reserves, foreign exchange control is an important tool to stabilize the exchange rate of the local currency against foreign currencies. 3. to prevent capital flight or large-scale speculative capital flows and maintain the stability of the countrys financial markets. In the absence of foreign exchange controls, this will attract speculative capital inflows, the latter will significantly increase the distortion of price signals Once the bubble bursts, speculative capital flight, and will trigger a series of chain reactions, resulting in rapid deterioration of the economic situation Foreign exchange controls are an effective means for these countries to maintain the stable operation of the countrys financial markets 4. increase the countrys international reserves Any country Any country needs to hold a certain amount of international reserve assets International reserve deficit countries can increase international reserves through a variety of ways, but most of these measures require long-term implementation to achieve significant results Foreign exchange control helps the government to achieve the purpose of increasing international reserves 5. effective use of foreign exchange funds to promote priority development of key industries Foreign exchange control gives the government greater control over the use of foreign exchange The government can Use it to restrict the import of certain commodities to protect the countrys corresponding infant industries; or provide foreign exchange to certain industries to promote the priority development of key industries 6. enhance the international competitiveness of the countrys products Under the condition that the countrys enterprises are not enough to ensure the international competitiveness of products, the government can use foreign exchange control to develop foreign markets for enterprises For example, the official exchange rate is one of the important means of foreign exchange control, when When the government directly lowers the exchange rate of the local currency or restricts short-term capital inflows, it can help the country increase exports. 7. enhance financial security Financial security refers to a countrys ability to resist internal and external financial risks and external shocks under conditions of financial internationalization. The factors that affect financial security include domestic non-performing loans, financial system reform and regulation, as well as external factors such as the size and efficiency of external debt and international capital shocks.

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