Foreign exchange control refers to the restrictive measures taken by a government to balance the international payments and maintain the exchange rate of its own currency. It is also called foreign exchange management in China. The government's international trade policy of restricting imports through laws and regulations to restrict international settlement and foreign exchange transactions.
Foreign exchange control is divided into quantity control and cost control. The former means that the State Administration of Foreign Exchange directly restricts and allocates the volume of foreign exchange transactions, and achieves the purpose of restricting exports by controlling the total amount of foreign exchange; The latter refers to the multiple exchange rate system implemented by the State Administration of Foreign Exchange for foreign exchange transactions.
Adjusting the structure of imported goods by using the difference of foreign exchange transaction costs. Foreign exchange control refers to any form of intervention by the government or the central bank in foreign exchange holding, foreign trade or capital flow to avoid excessive expansion of the national money supply or depletion of foreign exchange reserves.
Foreign exchange control can be divided into narrow sense and broad sense. In a narrow sense, foreign exchange control means that a government restricts residents' foreign exchange transactions and international settlement under current account. In a broad sense, foreign exchange control refers to a government's restrictive management of foreign exchange inflows and outflows involving residents and non-residents.
The role of foreign exchange control:
1, to prevent capital flight.
2. Keep the exchange rate stable.
3. Maintain a unified domestic local currency market and prevent speculation.
4. It is convenient to implement differential treatment in trade.
5. Protect national industries.
6. Conducive to the national economy and people's livelihood.
7. Raise the currency and stabilize prices.