Abstract
This paper considers the effectiveness of capital controls as a protective action. We analyse the recent cases of Iceland and Cyprus and examine the extent to which the controls on free capital movement delivered the outcome that motivated their imposition in each country. The methodology used examines main macro-economic indicators and attempts to locate significant variations pre and post capital controls. The results indicate that controls were only partially successful. In Iceland they did not manage to control the pressure over foreign exchange rate. In case of Cyprus controls achieved only partially to control outflows. Belonging to the eurozone was not proven to be a negative factor for success of the measures in Cyprus.
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