This paper introduces a new index, KAOPEN, designed to measure the extent of financial openness in capital account transactions. The authors address the lack of a proper method to quantify the openness or restrictions in cross-border financial transactions, which has been a significant challenge in the debate on financial liberalization and capital controls. The KAOPEN index is constructed using binary dummy variables from the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER), focusing on the intensity and extent of capital controls. The index covers 181 countries from 1970 to 2005, providing a comprehensive dataset for analysis. The authors compare their index with other existing measures, highlighting its advantages in terms of coverage and transparency. The results show that industrialized countries have maintained high levels of financial openness, while less developed and emerging market countries have experienced varying degrees of openness over time. The paper also discusses regional variations in financial openness and provides a global overview of financial openness.This paper introduces a new index, KAOPEN, designed to measure the extent of financial openness in capital account transactions. The authors address the lack of a proper method to quantify the openness or restrictions in cross-border financial transactions, which has been a significant challenge in the debate on financial liberalization and capital controls. The KAOPEN index is constructed using binary dummy variables from the IMF’s Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER), focusing on the intensity and extent of capital controls. The index covers 181 countries from 1970 to 2005, providing a comprehensive dataset for analysis. The authors compare their index with other existing measures, highlighting its advantages in terms of coverage and transparency. The results show that industrialized countries have maintained high levels of financial openness, while less developed and emerging market countries have experienced varying degrees of openness over time. The paper also discusses regional variations in financial openness and provides a global overview of financial openness.