Balance of Payments

Balance of payments

A statistical compilation formulated by a sovereign nation of all economic transactions between residents of that nation and residents of all other nations during a stipulated period of time, usually a calendar year.

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balance of payments

The record of money payments between one country and other countries. Balance of payments is more inclusive than balance of trade because balance of payments comprises foreign investment, loans, and other cash flows as well as payments for goods and services. A country's balance of payments has a significant effect on its currency value in relation to other currencies. It is of particular interest to individuals who own foreign investments or who own domestic investments in companies dependent upon exports.

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Balance of Payments

The difference between the value of transactions in which money leaves a country and the value of transactions in which money enters it. A positive balance of payments means more money enters a country than leaves it, while a negative BOP indicates the opposite. The balance of payments includes the trade balance, but also transactions such as foreign direct investment, transfers of currency, and payments for goods and services. Investors who deal in foreign investments use the BOP to help make investment decisions.