Capital Flows

The balance of payments (BOP) is a record of all monetary transactions between a country and the rest of the world.

The current account represents the sum of net exports, factor income, and cash transfers.

The financial account measures the net change in ownership of national assets.

The capital account acts as a sort of miscellaneous account, measuring non-produced and non-financial assets, as well as capital transfers.

Equilibrium in the market for a country's currency implies that the balance of payments is equal to zero.