Balance of payments Definition
The balance of payments is a simple measure of the payments in financial capital that flow from one nation to another. If more money flows in than out, one has a positive balance of payments - if more flows out than in, one has then a negative balance. The money flowing over the border is like other money paying for goods, commodities, real estate, services, securities.
It's usually separated into:
- Current Account. Goods and services.
- Financial Account. Financial assets. (Stocks, Bonds, Foreign Direct Investments).
- Capital Account. Non-financial assets.