Inconvertibility


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Inconvertibility

The inability of a local currency to be exchanged for another currency. Often includes transfer risk.

Inconvertibility

The state in which a currency may not be exchanged for a foreign currency. A few socialist governments issue inconvertible currencies such as the Cuban peso in order to protect their citizens from perceived capitalist infiltration. Most of the time, however, domestic regulators may deem a foreign currency inconvertible in order to protect local investors from bad investment decisions. For example, regulators may deem a currency going through a period of hyperinflation as inconvertible; that way, investors do not make investments in that currency as they are likely to soon be worthless. See also: Foreign exchange.
References in periodicals archive ?
If not, would the inevitable outcome of government policy be inconvertibility, floating exchange rates, and discretionary central banking?
The inconvertibility of this horizon-specific capital plays a central role in the Austrian business cycle theory.
The DCIP is an effective tool to mitigate risk of non-payment of LC arising from a variety of factors, which include insolvency of the buyer/ issuing bank; failure or refusal of the issuing bank to provide reimbursement on due date; currency inconvertibility and transfer restrictions imposed by issuing bank's country; expropriation, confiscation or government intervention in the business of the issuing bank; and war or civil disturbance in the issuing bank's country.
The policy is an effective tool to mitigate risk of non-payment of LCs arising from a variety of factors including insolvency of the buyer/ issuing bank; failure or refusal of the issuing bank to provide reimbursement on due date; currency inconvertibility and transfer restrictions imposed by issuing bank's country; expropriation, confiscation or government intervention in the business of the issuing bank; and war or civil disturbance in the issuing bank's country.
private investment by mitigating risks, such as political risks (including currency inconvertibility, expropriation, political violence, and terrorism), for U.S.
Massive fraud, the inconvertibility of the national currency, poor market conditions, and rampant inflation all contributed to the collapse of agricultural production and the stagnation of the economy (Diarrah 1991: 59).
(7) MIGA provides such insurance to private investors against five risks, including: 1) expropriation; 2) breach of contract; 3) currency inconvertibility and transfer restrictions; 4) war, civil disturbance, terrorism, and sabotage; and 5) non-honoring of sovereign financial obligations.
The respondents also considered "expropriation, currency inconvertibility or contract abrogation by host government" an important legal factor which has a mean 3.71 followed by the former (i.e.
(8) As we will show later, the famous sentence by Lessing about inconvertibility of the word and the image ("Es bleibt dabei: die Zeitfolge ist das Gebiete des Dichters, so wie das Raum das Gebiete des Malers") is described in terms of communicative and intermedial state: "die Nachbarschaft" is the main characteristic of the relationship of the poetry (the verbal) and the painting (the visual).
Inconvertibility was permitted for a term of two years, until December 1886.
This concerned a proposal, agreed to over the following months, that Ireland should participate in the US investment guarantee programme, the purpose of which was to provide insurance against currency inconvertibility or expropriation for new American investments abroad.