Free movement of capital legal definition of free movement of capital
free movement of capital
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free movement of capital insofar as is necessary to ensure the functioning of the COMMON MARKET, the law of the EUROPEAN UNION compels the member states to allow capital of residents to move freely regardless of discrimination based on nationality or the place of investment of the capital. The treaty provision was extended by a 1988 directive which enshrined the principle of full liberalization of capital movements between Member States with effect from 1 July 1990. It intended to abolish the general arrangements for restrictions on movements of capital between persons resident in Member States. ‘Capital movements’ are all the operations necessary for the purposes of capital movements carried out by a natural or legal person, including direct investments, investments in real estate, operations in securities and in current and deposit accounts, and financial loans and credits. Provision is made for emergency measures.