Sunday, April 20, 2008

Balance of payments

In economics, the balance of payments, (or BOP) deals with the payments that flow between any individual country and all other countries. It is used to review all international economic transactions for that country during a specific time period, typically a year. The BOP is determined by the country's exports and imports of goods, services, and financial capital, as well as financial transfers. It reflects all payments and liabilities to foreigners (debits) and all payments and obligations received from foreigners (credits). Balance of payments is one of the major indicators of a country's status in international trade, with net capital outflow.

The balance, like other accounting statements, is prepared in a single currency, generally the domestic. Foreign assets and flows are treasured at the exchange rate of the time of transaction.

No comments: