In this revision video we look at the financial account of a country's balance of payments.
The financial account includes transactions that result in a change of ownership of financial assets and liabilities between a country’s residents and non-residents. This includes:
1.Net balance of foreign direct investment (FDI)
2.Net balance of portfolio investment flows (e.g. inflows/outflows of debt and equity)
3.Balance of banking flows (e.g. hot money flowing in/out of a country’s commercial banks)
4.Changes to the value of a country’s reserves of gold and foreign currency
Examples of inflows of money on the UK financial account:
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