What is "Capital Account Convertibility" ?

It is the freedom to convert local financial assets into foreign financial assets and vice versa at market determined rates of exchange.

In a country's balance of payments, the capital account features transactions that lead to changes in the overseas financial assets and liabilities. These include investments abroad and inward capital flows. Capital account convertibility implies the freedom to convert domestic financial assets into overseas financial assets at market determined rates.

It can also imply conversion of overseas financial assets into domestic financial assets. Broadly, it would mean freedom for firms and residents to freely buy into overseas assets such as equity, bonds, property and acquire ownership of overseas firms besides, free repatriation of proceeds by foreign investors.

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Value of the capital resources shall be convert globally with  a standard exchange rate. I agree with all of the answers provided 

 Joshi Mathew

Certified Internal Auditor #1036906

It describes the feature of a country's financial system where local financial assets are traded freely into foreign financial assets at a market determined exchange rates.

The ability to conduct transactions of local financial assets into foreign financial assets and vice versa, freely and at market determined exchange rates.It helps to attracts foreign investments.It offers foreign investors a lot of comfort as they can re-convert local currency into foreign currency anytime they want to and take their money away.

سلام علیکم

Capital account convertibility is participation in the country's attractiveness for foreign capital.

It allows the repatriation of earnings of foreign investors.

On the other hand, it's capital flight and it allows the volatility in exchange rates, fluctuations in foreign exchange reserves and interest rates.

Capital account convertibility is the freedom to convert local financial assets into foreign financial assets at market determined exchange rates.

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