Overview

convertibility


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The right to change money into foreign currency. A currency is convertible if holders can change it into foreign currency without permission from the authorities. A fully convertible currency is convertible by any holder, for any purpose. A currency may be convertible for non-resident but not for resident holders. Under current account convertibility holders have the right to convert their currency for any current account purpose, such as trade or foreign travel, but not for capital account purposes such as making loans or buying assets abroad. Current account convertibility requires that the authorities can monitor the use of funds; under full convertibility this is not necessary.

Subjects: Economics.


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