Capital Controls (Hansard, 15 July 1988)

§ Mr. Lilley

The United Kingdom, the Federal Republic of Germany and the Netherlands all have full freedom of capital movements, while Belgium and Luxembourg have no controls apart from those needed to maintain a dual exchange rate system, under which they have an "official" foreign exchange market for current account transactions, and a "free" one for capital transactions. Only authorised banks may carry out exchange transactions permitted in the "official" market, although they may sell on the official market currencies acquired on the free market. French residents are still not generally permitted to hold bank accounts abroad or open foreign currency accounts in France and there are restrictions on the amounts that banks can lend to non-residents. Denmark retains some restrictions, for example, on the maturity of foreign loans taken up by non-financial enterprises, on financial credits and loans between residents and non-residents, on residents holding foreign bank deposits and on the size of non-residents' krone deposits in Danish banks. The Italians have committed themselves to liberalisation of all remaining restrictions in October 1988, except on residents' holdings of lire or foreign currency deposits abroad, the opening of lire or foreign currency lines of credit in favour of foreign countries and foreign exchange forward or option transactions with foreign counterparties. Ireland, Greece, Portugal and Spain maintain more extensive systems of exchange control covering, in particular, those areas such as short-term capital370W movements, the issuing of unlisted securities and non-commercial loans, where, until now, there has been no binding obligation to liberalise. Adoption of the European Community's capital liberalisation directive on 24 June extends liberalisation to all capital movements within the Community, in most cases by 1 July 1990 but with extensions for Spain, Ireland, Greece and Portugal.