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Currency regulation and control

Currency regulation and controlCurrency regulation - a form of state regulation of international economic relations, which is expressed in the management of the calculations and order the commission of various foreign currency operations and currency values. In the countries of the capitalist system, it depends on the global economy, the state of the state's economy, reliability of the financial system. In addition, a decisive influence on monetary policy have the relations between states.

Some states use foreign exchange controls as an instrument of state intervention in foreign trade. In addition, it is protective of foreign expansion.

In other words, exchange controls intended to reflect the interests of the state and at the same time it ruled unjustified intervention in foreign exchange transactions. Also, the state sets limits on currency fluctuations, with a view to its regulation. Such limits are called trading band.

Law on currency regulation exist in every state and express the basic provisions of the state monetary policy. The legislation can be established exchange restrictions - that is, restrictions on operations with currency and other currency values. It can be expressed in the regulation of transfers abroad, the export of capital and the prohibition of free trade in foreign currencies.

The central bank's benchmark government may be currency basket - that is the definition of the real exchange rate of the country in relation to the two currencies - the U.S. dollar and euro.

Currency position is the difference between assets and liabilities in foreign currency, in other words the ratio between the amount of claims and liabilities of a bank or other place of business in foreign currencies. Distinguish closed and open currency positions. Closed positions mean that the volume of claims and liabilities are equal. Short open foreign exchange positions mean that the requirements exceed liabilities. In the opposite situation is called a long position open.

The combination of the two opposing foreign exchange transactions for the same amount with different value dates is called a currency swap.

Currency swap - often carried out in trading on the foreign exchange market operation, when the extended open position in foreign currency.

Exchange rate policy is a set of economic, institutional, legal currency in the regulation of relations conducted by government organizations and financial and banking institutions. Special bodies engaged in foreign exchange regulation, may impose certain currency restrictions, to exchange control under the policy. The law on currency regulation - a document governing the process of regulating exchange relations from the competent authorities.

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