The free movement of capital represents a prerequisite for the free movement of services. The EEA Agreement provides a comprehensive and non-discriminatory framework for capital transfers, cross-border investments (whether direct or indirect), loans, etc. The aim is to eliminate not only exchange controls affecting capital transfers directly, but also other indirect barriers to capital movements.
Domestic rules on capital movements apply equally to foreign and national residents in any one country. Investors and others who frequently transfer capital between countries enjoy consistent treatment. This, in the long term, leads to better allocation of resources and capital.
Under certain circumstances the signatories of the EEA Agreement are allowed to restrict the free movement of capital, for example when free capital transfers threaten the balance of payments or the domestic capital market in general. Under such exceptional circumstances national authorities may take preventive measures after discussing them with the other EEA countries.