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| Definition: |
The balance of payments is a record of a country's international transactions with the rest of the world. Transactions are organized in two different accounts, the current account and the capital and financial account.
The capital and financial account has two major components:
- the capital account
- the financial account
These are in accordance with the same accounts in the System of National Accounts (SNA). Assets represent claims on residents and liabilities represent indebtedness to nonresidents.
Capital transfers consist of those involving transfers of ownership of fixed assets; transfers of funds linked to, or conditional upon, acquisition of disposal of fixed assets; or cancellation, without any counterparts being received in return, of liabilities by creditors. This item does not cover land in a specific economic territory.
In the financial account, all components are classified according to type of investment or by functional breakdown (direct investment, portfolio investment, other investment, reserve assets).
Most entries in the capital and financial account should be made on a net basis; that is, each component should be shown only as a credit or debit.
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| Source
Publication: |
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BPM, paras. 150, 172.
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| Statistical
Theme: Financial statistics - Balance of payments |
| Created
on Tuesday, September 25, 2001 |
| Last
updated on Tuesday, March 26, 2013 |
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