restrictions on currency flows between countries, imposed by central banks or monetary authorities. A country may: (1) prohibit residents from owning a bank account denominated in another currency or an account in a foreign bank; (2) prohibit exporters from drawing against a bank account except for internal transfers; and (3) limit bank trading in a domestic currency to discourage currency speculation. Exchange controls are common in some European countries and in most developing countries; a bank account in one of these currencies is known as a blocked account. These currencies frequently are overvalued in relation to unimpeded currencies, and may not be convertible easily into other currencies or a monetary standard, such as gold.
government regulation of foreign exchange (currency trading).
