Convertible Currency

Some governments put a tight restriction on their currencies. Others don't. Those with little or no restriction (you can count the dollar and the euro in this group) are known as convertible. These trade freely on the open market.

The highly restricted currencies are known as non-convertible. However, it's not a simple black-or-white situation. There is a lot of grey space in the convertibility discussion.

For instance, there are some countries (like Cuba and North Korea) where exchanging currency above a certain amount is illegal. Meanwhile, China actually has two currencies. There's one that exists outside of China (designated by the code CNH). There's a second one that gets used inside China (CNY). Any transaction involving a person or company inside the country has significant restrictions on convertibility. However, the CNH version floats relatively unencumbered.