Capital account refers to the increase or decrease of international reserve assets caused by capital inflow and outflow in the international market. The capital account reflects the capital output and input expressed in currency between one country and other countries, mainly involving capital and reserves.
The characteristic of capital account is that residents can obtain foreign exchange through current account and capital account transactions, and the obtained foreign exchange can be sold to banks in the foreign exchange market or held at home and abroad. At the same time, the foreign exchange needed for current account and capital account can be purchased freely in the foreign exchange market.
To sum up, current account and capital account are two important concepts in international economic transactions. The current account reflects the flow of physical assets, while the capital account involves the output and input of capital, which constitute an important part of the balance of payments.
What are the characteristics of capital account liberalization?
1. Increased channels for obtaining foreign exchange: users can obtain foreign exchange through current account and capital account without strict restrictions.
2. User's right to speak is enhanced: Foreign exchange obtained through current account and capital account can be sold to banks or held at home or abroad, which increases users' foreign exchange autonomy.
3. Flexible and diversified trading methods: Users can freely purchase the required foreign exchange in relevant markets for current account and capital account transactions.
4. Free holding of legal tender: domestic and foreign users can freely hold the legal tender of the host country at home and abroad to meet the needs of asset development.