In principle, that involves no restrictions on capital outflow and no restrictions on incoming foreign direct investment, but a requirement that a proportion (initially 30 per cent but later reduced to 10 per cent) of incoming portfolio investment be deposited with the central bank at zero interest for a period of one year.
The intention of this measure was to discourage short-term capital inflow while creating no barriers to other forms of capital movement. Whether such a measure would work in the relatively sophisticated financial markets which we now have in New Zealand is at this stage an open question.