how does capital account convertibility compare to current account convertibility

Capital Account Convertibility (CAC) refers to the ability of individuals, companies, and governments to freely purchase, sell, transfer, and convert capital assets into any other internationally accepted currency or form of payment. This includes the ability of individuals and businesses to invest in or borrow money from another country. CAC is a key factor in allowing capital flows to move easily around the world. Current Account Convertibility (CAC), on the other hand, is the ability of individuals and firms to convert their local currency into a different country’s currency for day-to-day transactions and payments. Unlike CAC, this does not include investments or large capital transfers. This is why CAC is a more liberal form of international exchange than CAC. Whereas CAC can affect investments and development trends, CAC does not do so as strongly. CAC only affects the movement of goods, services, and remittances between different countries.