Exchange control is universal for the majority of developed countries. What is the exchange

сontrol?

It is the control by the state through the banking system of dealings in gold and foreign currencies.

Exchange control is concerned with controlling the purchase and sale of currencies by residents

Alone, since governments do not have complete powers to control the activities of non-resi

Dents. This must be done through the market and is a matter of exchange management (exchange

Equalization account). Exchange control is required only where a country wishes to influence the

International value of its currency. It is not willing to leave the value of its currency in terms of other

Currencies or gold to be determined in the free market, as it would be under a system of floating

Exchange rates, or to allow the fixed external value of its currency to be the determinant of the

Domestic price level. In its most extreme form, a country facing a balance-of-payments deficit may

Use exchange control to restrict imports to the amount earned in foreign exchange by its nationals.

All forms of exchange control are discouraged by the Organization for Economic Cooperation and

Development and other international organizations concerned with encouraging international trade.

Should be noted that a currency is not fully convertible when exchange control is operated.