Balance of Payments

Definition

The balance of payments accounts measure the economic transactions between a country and the rest of the world over a specific period, typically a year. It consists of three main components: the current account, capital account, and financial account.

Related terms

Current Account: This term refers to the part of the balance of payments that records transactions related to trade in goods and services, as well as income from investments.

Capital Account: This term refers to the part of the balance of payments that records transfers of ownership or rights to non-financial assets, such as land or patents.

Financial Account: This term refers to the part of the balance of payments that records transactions involving financial assets, such as stocks, bonds, and foreign direct investment.