Balance Of Payments (BOP)
A record of all transactions made between one particular country and all other countries during a specified period of time. BOP compares the dollar difference of the amount of exports and imports, including all financial exports and imports. A negative balance of payments means that more money is flowing out of the country than coming in, and vice versa. Investopedia Says:
Balance of payments may be used as an indicator of economic and political stability. For example, if a country has a consistently positive BOP, this could mean that there is significant foreign investment within that country. It may also mean that the country does not export much of its currency.
This is just another economic indicator of a country's relative value and, along with all other indicators, should be used with caution. The BOP includes the trade balance, foreign investments and investments by foreigners. Related Terms:
Balance Of Trade - BOT
Cash In Advance
Current Account
Current Account Deficit
Debt Overhang
Debtor Nation
Dollar Drain
Foreign Currency Effect
Most Favored Nation Clause
Reserve Tranche |