balance of payments


balance of payments

Systematic record of all economic transactions during a given period between residents (including the government) of one country and residents (including the governments) of other countries. The transactions are presented in the form of double-entry bookkeeping. The U.S. balance of payments, for example, records the various ways in which dollars are made available to foreigners through U.S. imports, U.S. tourist spending abroad, foreign lending, and so on. These expenditures are shown on the debit side of the balance. The credit side shows the various uses to which foreigners put their dollars, including paying for U.S. exports, servicing debts to the U.S., and the like. Foreign countries may acquire more dollars than they need to spend on U.S. goods and services and may hold the surplus or purchase gold or securities; or they may have fewer dollars than they need to purchase U.S. goods and services, and may acquire additional dollars by transferring gold, selling holdings in the U.S., and so on. Certain forms of transferring funds (e.g., large outflows of gold) are less desirable as a way of settling foreign debts than others (e.g., transfers of currency acquired through international trade). The International Monetary Fund helps address problems relating to balance of payments. See also balance of trade.

This entry comes from Encyclopædia Britannica Concise.
For the full entry on balance of payments, visit Britannica.com.

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