Prudential capital controls

Okay kiddo, imagine you have a piggy bank where you keep all your allowance money. You save up all your money so you can buy something you really want, like a new toy.

But let's say, your friend keeps taking money out of their piggy bank for candy and toys and doesn't save it like you do. Now, they don't have enough money to buy things they really want.

That's where prudential capital controls come in. They are rules that countries make to make sure their banks and people are using their money wisely, just like you with your piggy bank. They put limits on the amount of money that banks and people can take out of the country or spend on certain things, like buying foreign investments.

These rules are put in place to help make sure that countries aren't losing too much money to other countries and that their people are saving enough money for important things like buying a house or paying for college.

It's kind of like a mommy and daddy keeping a close eye on how much money you're spending, so that you don't run out of money and can still save up for that really cool toy you've been wanting!