The risk associated with unclear cross-border capital flows is referred to as transfer risk.
When this occurs, it is claimed that a certain economy is going through a capital outflow. Capital outflows can have a variety of economic and political origins, but instability in one or both of these sectors is typically where it all begins. Whatever the rationale, most nations consider capital outflow undesirable and enact laws to restrict the flow of money abroad. While doing so could encourage short-term growth, it typically causes more economic problems than it fixes. Massive capital flight often isn't the problem; rather, it's a sign of a bigger problem. Countries with outflow restrictions may find it more challenging to attract business since companies are aware that they won't be able to recover much of their investment if an opportunity doesn't work out.
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