retirement pensions. • A current account deficit implies that a country is
running a net surplus in capital account and that the country is a net borrower from the rest of the world
– A debit（借方）entry represents a loss of foreign exchange. (outflow)
Surplus - The value of the credits exceed the debits
Deficit - The value of the debits exceed the credits
Only apply to particular area of the balance of payments.
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BPM6 BY IMF
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Components of the BOP
• Current Account • Capital Account • Statistical Discrepancy
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Additional BOP Summary Measures
• Balance of Trade—the value of merchandise exports minus imports. Page68 "Domestic bussiness firm and labor union...., it is popularly cited measures."
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Statistical Discrepancy
• Statistical Discrepancy refers to the measurement errors and omissions resulting from problems of incomplete or inaccurate data.
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• How big is the U.S.current account deficit compare to other countries? P64
• How big is the China current account surplus compared to other countries?
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Features of the BOP
• BOP follows the accounting procedure of doubleentry bookkeeping (debits and credits). P59（复式记 账法）
– A credit（贷方）entry records an item or transaction that brings foreign exchange into the country. (inflow)
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Current Account
• The current account includes the value of trade in merchandise, services, income from investments, and unilateral transfers.
• /china/cur rent-account-to-gdp
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$133billion (highest )
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$67billion
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Capital Account
• The capital account include: – Direct Investment – Purchases of Equity and Debt Securities – Bank Claims and Liabilities – U.S. Government Assets Abroad – Foreign Official Assets in the U.S.
Chapter 3 The Balance of Payments
宁波工程学院国商教研室蒋力编
Balance of Paymens• Balance of Payments (BOP) - an accounting record of a country’s trade in goods, services, and financial assets with the rest of the world during a particular time period (year or quarter).
• Merchandise—tangible goods. • Services—include travel and tourism, royalties(版权),
transport costs, and insurance. • Income from investments—interest and dividends. • Unilateral transfers—include foreign aid, gifts, and
• Official Settlements Balance—essentially measures the international reserve change, furthermore, it measures the potential pressure on the value of domestic currency relative to foreign exchange