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Economics explained
Category:
Balance of payments
The balance of payments
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A country’s balance of payments is a record of all the economic transactions between residents of that country and residents in other countries.
Money coming into the country creates credit items, which have a positive sign.
Money going out of the country gives rise to debit items which have a negative sign.
The components of the balance of payments are
The current account
The capital account
The financial account
Equilibrium in the balance of payments
A balance of payments is in equilibrium if, over a period of years, the exchange rate remains stable and autonomous credits and debits are equal in value (the annual trade in goods and services is in overall balance).
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