What is a defining characteristic of a balance-of-payments statement
52.Which of the following falls on the minus side ofthe U.S. balance of payments? Show
Get answer to your question and much more 53.A balance-of-payments statement includes threeaccounts. Two of those accounts are the currentaccount and the capital account. What is thethird account found on the balance-of-paymentsstatement? Get answer to your question and much more 54.The _____ of the balance-of-paymentsstatement is most likely to record allmerchandise exports, imports, and services plusunilateral transfers of funds.A.currentaccountB.capital accountC.credit account Home > Statistics > Outline of Statistics and Statistical Release Schedule > Explanations of Statistics > Explanation of "Balance of Payments Related Statistics (Data Based on the BPM5)" Explanation of "Balance of Payments Related Statistics (Data Based on the BPM5)"May 2011 This explanation is for the data through 2013 (discontinued). Basic informationCompilation section : Ministry of Finance and Bank of Japan, International Department, Balance of Payments Division Balance of Payments Statistics are aggregated and estimated by the Bank of Japan, which is entrusted by the Minister of Finance under the Foreign Exchange and Foreign Trade Act Frequency of compilation : Balance of Payments Time of release : Balance of Payments Method of release : Bank of Japan Internet web site Balance of Payments Statistics are jointly released by the Bank of Japan and the Ministry of Finance.
Publications : "Balance of Payments Quarterly (International Department, Bank of Japan)" From the Bank of JapanThis document has been prepared for current and prospective users, and provides easy-to-understand explanations of the outline of the balance of payments (BOP) statistics as based on the methodologies issued by the International Monetary Fund (IMF). 1. DefinitionThe BOP is a statistical statement that systematically summarizes, for a specific time period, the economic transactions of an economy with the rest of the world. The transactions between residents and nonresidents consist of: (1) those involving goods, services, and income, (2) those involving financial claims and liabilities, and (3) those classified as transfers. A transaction itself is defined as an economic flow that reflects the creation, transformation, exchange, transfer, or extinction of economic value and involves changes in ownership of goods and/or financial assets, the provision of services, or the provision of labor and capital. 2. MethodologiesCompilation PrinciplesJapan's BOP statistics are based on the recording
principles in the Balance of Payments Manual, fifth edition (BPM5) issued by the IMF. In accordance with the provisions of Article 8 Paragraph 5 of the IMF Agreement, the IMF requires member countries to provide information on their BOP statistics. The BPM5 establishes the standard international rules for the compilation of BOP statistics and provides guidelines on the reporting format to the IMF.
The foreign exchange rates used in conversion are either of the following categories.
Classification of the Balance of PaymentsThe components of Japan's BOP statistics are based on the BPM5 issued by the IMF. That is to say, while the IMF's "standard components" provide the basis for Japan's BOP statistics, various additions are made to facilitate analysis and research. For example, net values are provided for principal components and data are re-classified into more detailed sub-components. (This is referred to as "analytical format.") The components of Japan's BOP statistics are presented in the table below. Table: Components of Japan's Balance of Payments Methodologies of ComponentsThe methodologies of the components of Japan's BOP statistics are as follows. 1. Current Account1.A.a Trade balance"Trade balance" covers international transactions of "goods" (exports and imports), which are recorded at market value on a free on board (FOB) basis. Trade balance comprises the five categories of general merchandise, goods for processing, repairs on
goods, goods procured in ports by carriers, and nonmonetary gold. However, transactions of nonmonetary gold pertaining to investment in gold and gold savings accounts are excluded. (These are included in "Capital and financial account".)
1.A.a.1 General merchandise"General merchandise" covers transactions of movable goods with changes of ownership between residents and nonresidents with quid pro quo. All transactions of movable goods, excluding goods for processing, repairs on goods, goods procured in ports by
carriers, and nonmonetary gold, are recorded in general merchandise. 1.A.a.2 Goods for processing"Goods for processing" covers processing materials exported (imported) for processing, and products that are re-imported (re-exported) after processing, which are recorded on a gross basis. This component is an exception to the change of ownership principle because goods for processing do not undergo a change of ownership. Source data are based on trade statistics. 1.A.a.3 Repairs on goods"Repairs on goods" covers the amount of repair for movable goods, such as ships and aircraft, owned by residents (nonresidents). This component is valued at the prices of repair, and not at the gross values of the goods. Source data are based on reports on payments/receipts. 1.A.a.4 Goods procured in ports by carriers"Goods procured in ports by carriers" covers transactions involving fuels, food stuff, and other goods procured in Japan (abroad) by carriers (ships, aircraft) owned by nonresidents (residents). Source data are based on reports on payments/receipts, and income/expenditure reports submitted by shipping enterprises and airlines (including the Japanese branches and representative offices of foreign shipping enterprises and airlines). 1.A.a.5 Nonmonetary gold"Nonmonetary gold" covers all transactions in gold, excluding gold held by monetary authorities as a reserve asset (monetary gold) and investment in gold and gold savings accounts. 1.A.b Services1.A.b.1 Transportation"Transportation" covers all transportation services provided between residents and nonresidents, such as passenger transportation, freight transportation, and rentals of transportation equipment with crew. Among related transactions, the followings are excluded from transportation:
freight insurance (included in insurance services); goods procured in foreign ports by carriers (ships, aircraft) and repairs of transportation equipment (included in goods); repairs of harbors and airfield facilities (included in construction services); rentals of transportation equipment without crew (so-called operational leases, which are included in other business services). 1.A.b.2 Travel"Travel" covers goods and services acquired by travelers from the economies in which they are traveling and for their own use. "Travel" is subdivided into two categories, namely, "business travel" and "personal travel,"
identified by purpose of travel. "Travel" is distinguished from other components of services by the following characteristics. 1.A.b.3 Other services"Other services" covers all service transactions between residents and nonresidents, excluding transportation and travel. These cover the following categories: communications services, construction services, insurance services, financial services, computer and information services, royalties and license fees, other business services, personal, cultural and recreational services, and government services, n.i.e.. 1.A.b.3.1 Communications services"Communications services" covers receipts and payments between residents and nonresidents pertaining to communication services. Source data are based on reports on payments/receipts. 1.A.b.3.2 Construction services"Construction services" covers construction and installation project work that are performed abroad by Japanese enterprises and performed in Japan by foreign enterprises. Source data are based on reports on payments/receipts. 1.A.b.3.3 Insurance services"Insurance services" are derived by subtracting claims from premiums of various types of insurance, which is provided by Japanese insurance enterprises to nonresident policyholders, and vice versa. Agent commissions for insurance transactions are also included in this component. Source data are based on reports on payments/receipts and reports submitted by non-life insurance enterprises. 1.A.b.3.4 Financial services"Financial services" covers financial intermediary and auxiliary services conducted between residents and nonresidents (except those of insurance enterprises). Source data are based on reports on payments/receipts, income reports submitted by banks and other financial institutions, reports concerning derivatives transactions, and reports concerning issuance of securities. 1.A.b.3.5 Computer and information services"Computer and information services" covers computer data and news-related service transactions between residents and nonresidents. Source data are based on reports on payments/receipts. 1.A.b.3.6 Royalties and license fees"Royalties and license fees" covers receipts and payments between residents and nonresidents for the authorized use of rights pertaining to patents, trademarks and other industrial property, mining rights and copyrights, and the use of produced original or prototypes, such as films, through licensing agreements. Source data are based on reports on payments/receipts. 1.A.b.3.7 Other business services"Other business services" covers various categories of service transactions between residents and nonresidents other than those defined above. The following are included in this component: gold dealing and other extremely short-term goods transactions that are concluded without crossing Japan's customs frontiers; and, the difference between buying and selling prices in nonmonetary gold transactions. Merchanting and other trade-related services, and operational leasing are also covered. Source data are based on reports on payments/receipts. 1.A.b.3.8 Personal, cultural and recreational services"Personal, cultural and recreational services" covers transactions between residents and nonresidents involving production expenses and rental charges for audiovisual and related services. Source data are based on reports on payments/receipts. 1.A.b.3.9 Government services, n.i.e."Government services, n.i.e." is a residual category associated with the public sector and covers services not included in the above categories. Source data are based on reports on payments/receipts and expenditure reports submitted by government agencies. 1.B Income"Income" covers two types of transactions between residents and nonresidents: those involving "compensation of employees" and those involving "investment income." 1.B.1 Compensation of employees"Compensation of employees" covers compensation paid by residents to nonresident individuals, and compensation earned by residents in foreign countries. This component includes receipts and payments of wages and salaries to foreign (Japanese) crew working on ships and aircraft of Japanese (foreign) nationality. Source data are based on reports on payments/receipts, and income/expenditure reports submitted by shipping enterprises and airlines. 1.B.2 Investment income"Investment income" covers receipts and payments of interest, dividends and other income associated with residents' external financial assets and liabilities. Realized capital gains and losses are not included in this component (included in capital and financial account). Investment income comprises the following categories: direct investment income, portfolio investment income, and other investment income. 1.B.2.1 Direct investment income"Direct investment income" covers interest, dividends, and other investment income accruing to direct investors holding direct investments. Reinvested earnings (direct investors' shares of earnings of direct investment enterprises that have not been formally distributed) have been included in this component, beginning with the statistics for January 1996. Source data are based on reports on payments/receipts, and annual reports concerning stock of retained earnings submitted by resident enterprises. See Box 1 for estimation method of reinvested earnings. Box 1: Estimation Method of Reinvested Earnings Reinvested earnings are estimated based on annual reports on the stock of retained earnings submitted by enterprises. Monthly statistics are derived as follows.
1.B.2.2 Portfolio investment income"Portfolio investment income" covers receipts and payments of dividends derived from investments other than direct investment, interest accruing to government bonds and other securities, and interest accruing to money market instruments. Receipts and payments of interest accruing to discount bonds and notes are also included in this component. Source data are based on reports on payments/receipts, and income reports submitted by banks and other financial institutions. Note: Revision in treatment of financial derivatives (derivatives transactions) As there is no actual flow of funds during the period in which discount bonds and notes are held, no reports are submitted on receipts and payments. Therefore, this sub-component is estimated based on annual reports submitted by enterprises. See Box 2 for estimation method for discount bonds and notes. Box 2: Estimation Method for Discount Bonds and Notes
1.B.2.3 Other investment income"Other investment income" covers receipts and payments pertaining to all claims and liabilities between residents and nonresidents other than direct investment income and portfolio investment income. For instance, receipts and payments of interest on loans and deposits are recorded under this component. Source data are based on reports on payments/receipts, and income reports submitted by banks and other financial institutions. 1.C Current transfersThe double-entry system requires offsetting items, transfers, to balance unilateral transactions, whereby one economic entity provides a real resource, such as goods and services, or a financial item without quid pro quo. Transfers are classified as "current transfers," which is current account payments of the counter-country, and as "capital transfers," which contributes to capital formation in the counter-country. The former is recorded under current account, and the
latter is recorded under capital and financial account. Current transfers are all transfers that are not classified as capital transfers, and include grants-in-aid between individuals and between governments, contributions to international organizations, workers' remittances, and receipts and payments of claims for non-life insurance. 2. Capital and Financial Account"Capital and financial account" covers receipts and payments of assets and liabilities between residents and nonresidents, and consists of two main categories: "financial account" and "capital account." 2.A Financial account"Financial account"
covers transactions of financial assets and liabilities between residents and nonresidents, and comprises the following sub-components: direct investment, portfolio investment, financial derivatives, and other investment. 2.A.1 Direct investment"Direct
investment" covers all transactions (investments) between direct investors and direct investment enterprises. These include acquisition of equity capital, reinvested earnings, and lending/borrowing of funds. A direct investor is defined as a resident entity with a lasting interest in an enterprise resident in another economy. In principle, a direct investment relationship comes into being when the percentage of ownership is 10 percent or more. 2.A.2 Portfolio investment"Portfolio investment" covers transactions between residents and nonresidents in equity and debt securities that are not included in "direct investment" and "changes in reserve assets." Bonds and notes and money market instruments are included in this component. Acquisitions by nonresidents of CD issued by Japanese banks are recorded under other investment (currency and deposits). On the other hand, acquisitions by residents of CD issued abroad (defined as securities under the Foreign Exchange Act) are recorded under portfolio investment. Government bonds, government agency bonds, and local government bonds are included in "sovereign bonds" of "outward portfolio investment, country breakdown of sovereign bonds." The time of recording for portfolio investment has been changed from settlement date to contract date since January 2005. Box 3: Treatment of Securities Lending Transactions Two sets of data are released for portfolio investment. One
is "including securities lending," while the other is "excluding securities lending." This is because securities lending transactions are subject to large short-term fluctuations, which can cause significant discrepancies between monthly portfolio investment data and actual developments in the buying and selling of securities. It is appropriate to exclude securities lending transactions to figure out developments in global securities transactions, or to accurately analyze developments in the
portfolio element of securities transactions. Source data are based on reports concerning securities transactions and reports concerning issuance and redemption submitted by securities companies, banks, major institutional investors, and government agencies. 2.A.3 Financial derivatives"Financial derivatives" covers realized profit or loss on options, futures and forward agreements, warrants, and currency swaps. Interest accruing to interest-rate swaps is also recorded under this component. Source data are based on reports on payments/receipts, and reports concerning derivatives transactions and securities transactions. 2.A.4 Other investment"Other investment" covers all financial instruments other than those classified as direct investment, portfolio investment, financial derivatives, or reserve assets. This component includes trade credits, loans, currency and deposits, and other assets/liabilities. Other assets/liabilities include receivable and payable accounts resulting from timing difference (adjustment for the timing difference between contract date and settlement date) since January 2005 when the time
of recording for portfolio investment was changed from settlement date to contract date. Securities lending transactions are recorded under loans in other investment. 2.B Capital account2.B.1 Capital transfers"Capital transfers" covers the transfer of funds pertaining to the acquisition/disposal of fixed assets, the transfer of ownership of fixed assets, and forgiveness of debt by creditors. Source data are based on reports on payments/receipts and reports submitted by government agencies. Source data for forgiveness of debt are based on reports submitted by government agencies and resident enterprises. Capital transfers are divided into the two categories of "public sector" and "other sectors," depending on whether the resident entity belongs to the public sector. 2.B.2 Acquisition/disposal of non-produced, nonfinancial assets"Acquisition/disposal of non-produced, nonfinancial assets" covers transactions involving intangible, nonfinancial assets, such as patents, copyrights, trademarks, transferable contracts, and the purchase and sale of land by embassies or international organizations. 3. Changes in Reserve Assets"Changes in reserve assets" covers changes in those external assets that are readily available to and controlled by monetary authorities. Reserve assets include monetary gold, SDRs, and reserve positions in the IMF. Source data are based on information concerning the stock of reserve assets prepared by the Ministry of Finance. Miscellaneous AspectsSeasonal Adjustment NewsWhat is a defining characteristic of a balance of payments?In international economics, the balance of payments (also known as balance of international payments and abbreviated BOP or BoP) of a country is the difference between all money flowing into the country in a particular period of time (e.g., a quarter or a year) and the outflow of money to the rest of the world.
Which best describes the balance of payments?What Is the Balance of Payments (BOP)? The balance of payments (BOP), also known as the balance of international payments, is a statement of all transactions made between entities in one country and the rest of the world over a defined period, such as a quarter or a year.
What are the 4 components of balance of payment?The four major components of a current account are goods, services, income, and current transfers.
What are the main factors that balance of payment?There are three main categories of the BOP: the current account, the capital account, and the financial account. The current account is used to mark the inflow and outflow of goods and services into a country. The capital account is where all international capital transfers are recorded.
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