Balance of payments

CFA Level I Glossary

The balance of payments is a country’s double-entry record of transactions with the rest of the world. The current account covers goods, services, income, and transfers. The capital and financial accounts cover asset flows such as investment and borrowing. Accounting identities require the accounts to balance overall; the economic story is how a deficit or surplus is financed. Do not confuse a current-account deficit with automatic “bad news” without looking at financing.

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