Convertibility << kuhn `vur` tuh BIHL uh tee >> is the absence of restrictions on exchanging the currency of one nation for that of another. Convertibility plays an important role in international trade. For example, an importer from nation A buying goods from nation B must find a way to pay for them. This is much easier if the two currencies are convertible, because all the importer needs to do is purchase an equivalent amount in B’s currency. Otherwise, the importer may not be able to buy B’s goods if B restricts the availability of its currency. Convertibility exists for most of the world’s major currencies. However, China’s currency is not fully convertible, and many less developed countries have inconvertible currencies. See also Exchange rate; Money (Money and international finance); Money laundering.
