Editing Capital market (section)

==Capital controls==
{{Main article|Capital control}}
Capital controls are measures imposed by a state's government aimed at managing [[capital account]] transactions – in other words, capital market transactions where one of the counter-parties{{efn|i.e., either the buyer or the seller.}} involved is in a foreign country. Whereas domestic regulatory authorities try to ensure that capital market participants trade fairly with each other, and sometimes to ensure institutions like banks do not take excessive risks, capital controls aim to ensure that the [[Macroeconomics|macroeconomic]] effects of the capital markets do not have a negative impact. Most advanced nations like to use capital controls sparingly if at all, as in theory allowing markets freedom is a win-win situation for all involved: investors are free to seek maximum returns, and countries can benefit from investments that will develop their industry and infrastructure. However, sometimes capital market transactions can have a net negative effect: for example, in a [[financial crisis]], there can be a mass withdrawal of capital, leaving a nation without sufficient [[foreign-exchange reserves]] to pay for needed imports. On the other hand, if too much capital is flowing into a country, it can increase [[inflation]] and the value of the nation's currency, making its exports uncompetitive. Countries like [[India]] employ capital controls to ensure that their citizens' money is invested at home rather than abroad.<ref name = "differentBook">{{cite book
 | author = Carmen Reinhart
 | author-link = Carmen Reinhart
 | author2 = Kenneth Rogoff| author2-link = Kenneth Rogoff
 | name-list-style = amp
 | title = This Time Is Different: Eight Centuries of Financial Folly
 | year = 2010
 | pages = ''passim'', esp. 66, 92–94, 205, 403
 | publisher = Princeton University Press
 | isbn = 978-0-19-926584-8
}}</ref>