Balance of payments

The balance of payments refers to the accounts that sum up a country's financial position relative to other countries.

The balance of payments is the record of all transactions between a country and the rest of the world. Defined as simply as possible, the balance of payments is broken down into the current account and the capital account.

The current account includes payments for exports and imports of goods and services, as well as money sent home by citizens working abroad and income from foreign investments. The capital account covers the difference between the amount that the country’s residents are investing abroad and the amount that foreigners are investing in it, plus some smaller items such as capital transfers and grants to other countries and changes in foreign currency reserves held by the central bank.

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