The process of liberalization of Indian economy has led to the opening up of current account and this initiated actions on convertibility of capital account. This idea got strengthened when Prime Minister Manmohan Singh advised RBI to relook at the merits of Fuller Capital Account Convertibility (FCAC). This article focuses on the advantages of full convertibility and vulenarable events that can trigger a crisis. It also discusses a few issues on FCAC.

The Tarapore committee on Fuller Capital Account Convertibility (FCAC), which was set up taking a cue from the Prime Minister's advice, had fairly touched upon most of the issues of FCAC and gave its recommendations to the RBI as well as the Central Government. Drawing from the statement of Manmohan Singh, an attempt is made to look upon the merits of full convertibility and is followed by some lessons from international experiences. Although, the committee's working reflected a detailed study, we submit some of the issues which needed to be worked upon in the days to come.

The term "Global Rupee" seems to be an exciting word for many of us in the event of globalization, when India is marching towards its vision 2020 to establish itself as a world leader. In this back drop, an attempt is made to list out the merits, if Indian rupee is to be internationalized. Full convertibility gives "the Indian rupee" an international status which is otherwise called "internationalization". This facilitates any kind of money transactions in any country. Internationalization will allow Indian currency to be used as a "vehicle currency" or a medium of exchange in the global foreign exchange markets. The Indian rupee can be utilized by foreign countries for making payments to any third country. Further, if the rupee becomes strong investors will use it as a "reserve currency" (just like the way investors hold dollar/euro today) for the purpose of investment.

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