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Abstract
As of June 1995, all industrial countries had eliminated exchange controls on both capital inflows and outflows. This follows the unique period in the history of international financial relations after the Second World War in which most countries maintained substantial restrictions on capital movements in attempts to fend off destabilizing external financial influences and to retain national savings for use in domestic reconstruction and development. Canada, Switzerland, and the United States maintained a liberal environment for most types of capital movement throughout the period, although there were temporary exceptions. The evolution of capital account liberalization in other industrial countries was relatively slow in the early stages and did not gain full momentum until the late 1980s. Germany made an early start in 1958, when it removed all controls on capital outflows. It continued to maintain tight controls on capital inflows because balance of payments surpluses engendered pressures toward an appreciation of the deutsche mark and threatened its exchange rate parity under the Bretton Woods system. Controls on inflows were removed in 1969 but were subsequently reintroduced on two occasions before being removed again in 1981.
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