Balance of Payments — Structure and Disequilibrium

A country's dealings with the rest of the world are not just about what it sells and buys — a student going abroad to study, a company borrowing from a foreign bank, and a relative sending money home from Dubai are all economic transactions crossing the border too. The balance of payments is the single record built to capture every one of them, and disequilibrium in that record is one of the most consequential things that can happen to an economy.

In two minutes

The Balance of Payments (BoP) is a systematic record of all economic transactions between a country's residents and the rest of the world over a given period, structured mainly into a current account and a capital account, and it is said to be in disequilibrium when it shows a persistent, significant deficit or surplus rather than balancing out.

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