Convertibility

Summary of Convertibility

The ability of a currency to be exchanged for other currencies in settlement of current account transactions. Currencies are convertible in varying degrees, although the ability of nonresidents freely to purchase and sell a given currency, without governmental restriction, indicates a high degree of convertibility. Conversely, a currency that cannot be freely purchased or sold by nonresidents is said to be inconvertible.

(Main Author: William J. Miller)

Convertibility and International Trade Economy

In relation to international trade economy, Christopher Mark (1993) provided the following definition of Convertibility: The ability of a nation's currency to be exchanged for other currencies without governmental restriction in settlement of current account transactions. Currencies are convertible in varying degrees; a currency that cannot be freely purchased or sold by nonresidents is said to be inconvertible. See exchange controls (Sec. I).

Convertibility in International Trade

Meaning of Convertibility, according to the Dictionary of International Trade (Global Negotiator): Ease of exchanging one currency for that of another nation or for gold.

Resources

See Also

• Finance
• Consumer Credit
• Negotiable Instrument
• Securities
• Financial Regulation
• Corporate Finance
• International Public Finance