> allow some US startup to undermine their currency and distort their financial system
How is it undermining a currency and distorting a financial system to allow people to exchange their OWN hard-earned money for another currency?
How is it undermining a currency and distorting a financial system to allow people to exchange their OWN hard-earned money for another currency?
None of which is to say that capital controls are a good thing, but you can understand how a government might want them, and might view circumventions as 'distortions'
In practice, it's because the government of that country says that it is.
https://catalogue.nla.gov.au/catalog/3070732 - The Malaysian currency crisis : how and why it happened / Mahathir Mohamad
edit: Sorry that first link is for a book
This might be better https://www.investopedia.com/articles/economics/08/currency-...
second edit - I'll add the relevant paragraph
> Anatomy of a Currency Crisis
> Investors often attempt to withdraw their money en masse if there is an overall erosion in confidence in an economy's stability. This is referred to as capital flight. Once investors sell their domestic currency-denominated investments, they convert those investments into foreign currency.
> This causes the exchange rate to get even worse, resulting in a run on the currency, which can then make it nearly impossible for the country to finance its capital spending.