The free movement of capital in the European Union : its nature, scope and limitations

Abstract

Divided into three parts, this work focuses on the nature, scope and limitations of the rules applicable to capital movements within the framework of the European Union. Part I (Nature) tackles the groundwork relating to the "free movement of capital" in the light of its historical development, models of economic theory and judicial interpretation. Chapter 1 gives a short introduction to the subject from a historical perspective, tracing the development of this Treaty freedom from the conception of the Community until the present day. Chapter 2 examines the problem of the absence of a definition of the term "free movement of capital" from the Treaty and attempts to bring together the soundest definitions in the context of the EC Treaty provisions. Chapter 3 then proceeds to give a brief analysis relating to the economic objectives sought by the imposition of capital controls and the effects and desirability of their removal. Part II (Scope) concentrates on the scope of application of capital movements under the relevant legal provisions of the EC Treaty as amended by the Treaty on European Union (TEU). The different treatment afforded movements between Member States and those with third countries is studied in the light of the relevant legal provisions. Moreover, the implications of capital liberalisation on the Maltese economy in view of the current trend of the liberalisation of financial services and the removal of barriers to capital movements, further accentuated by Malta's pending EU application, are considered. Part III (Limitations) is concerned with the limitations imposed on the effective application of capital movements in terms of the EC Treaty. The limitations and derogations that are presently permitted by the Treaty will be placed under the spotlight in an attempt to gain further insight into the underlying policies involved.