convertibility


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Related to convertibility: Currency Convertibility

Convertibility

The ability to exchange a currency without government restrictions or controls.

Convertibility

The state of or the ease with which a currency may be exchanged for a foreign currency. Currency convertibility is vitally important in the foreign exchange market; higher convertibility means that a currency is more liquid and, therefore, less difficult to trade. Factors affecting convertibility include the availability of foreign currency reserves in a given country and domestic regulations seeking to protect local investors from bad investment decisions in, say, a currency undergoing a period of hyperinflation. A few socialist governments even issue inconvertible currencies, such as the Cuban peso, in order to protect their citizens from perceived capitalist infiltration. See also: Inconvertibility.

convertibility

the extent to which a financial security such as a FOREIGN CURRENCY or CONVERTIBLE LOAN can be exchanged for some other currency or financial ASSET.

convertibility

the extent to which one foreign currency or INTERNATIONAL RESERVE ASSET can be exchanged for some other foreign currency or international reserve asset.

International trade and investment opportunities are maximized when the currencies used to finance them are fully convertible, i.e. free of FOREIGN EXCHANGE CONTROL restrictions.

References in periodicals archive ?
Convertibility is also tightly linked to the internationalization of the renminbi and the government's quest to make the yuan a reserve currency for central banks around the world.
The developing countries were concerned with developing policies and capacity before they could introduce full capital account convertibility whereas the developed countries assumed that these would be undertaken simultaneously.
The above evidence demonstrates that, contrary to the musings of most observers, the BCRA under convertibility maintained considerable discretion, especially after 1994.
A shares and B shares markets), which was characteristic of complete market segmentation, and similar to the Chinese foreign exchange markets before partial currency convertibility.
The Banque de France will be integrated, from January 1 onwards, into a European System of Central Banks that was inaugurated on June 30 (see separate article in this section) and therefore has no obligation to guarantee the convertibility of these currencies with the French Franc.
The paradox of indirect convertibility is briefly explained in section II.
It is in this backdrop that Pakistan has introduced convertibility at last from July 1, 1994.
2) Indeed, the gold standard of the 19th and early 20th centuries survived in part because it permitted the temporary suspension of the convertibility of note issues.
After selling pressure on the dollar intensified and foreign central banks stepped up their demands for gold conversions, President Nixon, on August 15, 1971, suspended convertibility of dollars into gold or other reserve assets for foreign monetary authorities.
Currency convertibility is still in question, and foreign firms can repatriate only 15 percent of earnings made in Poland.
The criteria report, "Measuring Transfer and Convertibility Risk," describes A.