Speaking of Capital Controls in Europe
Nations and states that fear economic disturbances may be tempted to impose controls on international capital flows. Continental Europe is facing a credit and banking crisis. Recently, European officials hinted unleashing a series of capital controls across Europe. If controls are implemented they will most likely target consumers, meaning limiting ATM withdrawals and bank transfers. If this does occur, what effect does this have on institutional investors?
In fact, it has been reported that the European Commission has been providing legal advice to countries who are considering leaving the euro. Institutional investors must come to realize that investing in distressed current account deficit markets bears a certain level of risk.
If governments are willing to impose capital controls on its citizens, how far off does that impact institutional investors?
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