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00:00With bank deposits flowing out of Greece at a record pace amid doubts about its future in the euro the government in Athens has closed banks limited withdrawals and halted transfers abroad . These restrictions. A last ditch effort to keep euros in Greek banks are called capital controls. A government can restrict withdrawals from banks limit foreign exchange transactions or tax stocks and bonds purchases in a financial crisis . Restrictions on outflows give policymakers some breathing space to fix problems in their economies . Thirty seven countries have used capital controls to restrict the flow of money out of their economies. Between 1995 and 2010 sometimes capital controls seem to work sometimes not. In the 1990s during the Asian financial crisis Malaysia recovered swiftly after imposing restrictions. But so did Korea without imposing restrictions and controls are neither foolproof nor cost free. In Greece controls are keeping money in the country but they also scare off investors. Right now Greece is in desperate need of investment to jumpstart its economy. Options are limited. If the government let banks operate normally the financial system would run out of money within days. With savers rushing to withdraw as much cash as possible that would almost certainly push Greece out of the euro area. And if Greece does leave the eurozone capital controls can stop the clock until the country manages to print a new currency .

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What Are Capital Controls?

With bank deposits flowing out of Greece at a record pace amid doubts about its future in the euro, the country has instituted banking restrictions called capital controls. But just what are capital controls, do they work and does Greece have any other option? Bloomberg takes a closer look. (Source: Bloomberg)

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