Any economists on the Vine?

[bobleponge]

This is a bit high brow for me, normally I'm down in the gutter talking about PB's cups etc.

The country that I am currently working in has a closed currency. That is to say, it cant be bought or sold outside of the country. If I come in, and want to get some money out of the bank, I have to account for every Dinar to the customs types before I leave.
I'm not allowed to come into the country, nor go out of the country carrying local currency, and I should report any non local currency that I'm carrying to the customs, and show them the same amount when I leave.

I dont often do this, but I was trying to see what the fiscal advantages are to a country that controls their currency in this way.
If there are real benefits, why dont more countries do it?
If there are no benefits, why do some countries (albeit very few) do it?


Perplexed from Oran

[zazen999]

Wow!

Every dinar accounted for? That must help curb spending.......

How does that work if you stay there a year or so? Or longer......and what happens if you lose a receipt?

[bubblewrap]

I think it stops the "currency" being traded on the money markets & all the "problems" that can arise with fluctuations in values.
The big money men(The Americans) could wreak havoc if there government fell out with the country concerned.
(The Americans did it to us in 1965/66 (because we(Harold Wilson)refused to get involved in Vietnam)
The local exchange rate is regulated & the country gets some "hard" currency.

[bobleponge]

There are 2 ways it works.
1st way is that the direct employees of the company I work for are paid expenses out of the company's legal local bank account. This money is accounted for by the company by means of expensive accountants.
2nd way is that non direct employees of the company come in with non local currency and exchange it on the black market (So I've heard obviously).
If you go to the bank and withdraw local currency on your visa card, this is noted into your passport, and it must be all accounted for, with receipts, on leaving.
I had an Italian who was held for almost 36 hours yesterday (hence the musings) as he wasnt aware that all had to be accounted for, and thus had kept no receipts for his 135 euro's that he had spent in a month.

[quark1]

It also keeps the exchange differential on both transactions in the country concerned - ie inward income.

But being held for 36hrs over not being able to account for what is actually a very small amount of cash seems punitive in the extreme and a country which I would - personally - wish to avoid at all costs.

It is also a very effective way of controlling the population should they wish to travel - that is if they can!