《国际金融课件》unit 3 balance of payment

1、Balance of PaymentsThe Components of BOPSee P34The International Monetary Fund describes the BOP as the following table.YOUR COMPANY NAME or YOUR SITE ADDRESSThe Components of BOPYOUR COMPANY NAME or YOUR SITE ADDRESSThe Components of BOPIt consists of two major accounts, the current account(经常性账户)a

2、nd the capital and financial account(资本与金融项目). YOUR COMPANY NAME or YOUR SITE ADDRESSCurrent Account See P35-36 The Trade Balance 贸易平衡 Non-Financial Services 服务贸易 Investment Income 投资效益 Unrequited Transfers 免费赠予YOUR COMPANY NAME or YOUR SITE ADDRESSThe Trade BalanceIt comprises merchandise exports a

3、nd (minus) imports. Merchandise refer to all movable goods such as cars, textiles and appliances. The trade balance accounts for the largest component of total international payment and it is the first item in the current account.YOUR COMPANY NAME or YOUR SITE ADDRESSNon-Financial ServicesIt compris

4、es non-financial services exports and (minus) imports. Non-financial services refer to freight, insurance, passenger and travel services. The non-financial services is the second item of the current account.YOUR COMPANY NAME or YOUR SITE ADDRESSInvestment Income 投资效益It comprises interest and dividen

5、ds from portfolio investment but excludes the earnings of incorporated enterprise that are not formally distributed. （投资收入包括证券投资产生的利息和红利，但不包括依法成立的企业尚未正式分配的那部分利润。） (In real practice, one part of the companys capital is for interest and dividends, the other part is for usage of other purposes. Althoug

6、h the second part of the capital also belongs to the shareholders, while it is not used for investment income and isnt included in the BOP. )YOUR COMPANY NAME or YOUR SITE ADDRESSInvestment IncomeA grouping of assets such as stocks, bonds, andcash equivalents. Portfolio investments are held directly

7、 by an investor or managed by financial professionals. Ineconomics, foreign portfolio investmentis the entry offundsinto a country whereforeignersdeposit money in a countrysbankor make purchases in the countrysstockandbond markets, sometimes for speculation.YOUR COMPANY NAME or YOUR SITE ADDRESSInve

8、stment IncomeThe investment income is the third item of the current account.Q: What is the distinction between direct investment and portfolio investment? See P36(Para2, line7)YOUR COMPANY NAME or YOUR SITE ADDRESSUnrequited TransfersIt comprises private unrequited transfers and official unrequited

9、transfers. Merchandise refer to all movable goods such as cars, textiles and appliances. The unrequited transfers is the final item of the current account.YOUR COMPANY NAME or YOUR SITE ADDRESSCapital and Financial AccountThe capital and financial account records the changes in a nations internation

10、al financial assets and liabilities during the BOP period, which is usually one year.YOUR COMPANY NAME or YOUR SITE ADDRESSCapital and Financial AccountSee P37Direct InvestmentOther CapitalYOUR COMPANY NAME or YOUR SITE ADDRESSDirect InvestmentIt is aforeign direct investment(FDI) is aninvestmentin

11、the form of acontrolling ownershipin abusinessin one country by an entity based in another country. YOUR COMPANY NAME or YOUR SITE ADDRESSDirect InvestmentQ: How to distinguish direct investment and portfolio investment?See P37 (Para 2, line2,line11)(1)Whether or not the investor intends to take an

12、active role in the management of the enterprise, the assets of which are being acquired. (2)Most countries solve the problem based on the percentage of foreign ownership by a single investor in the enterprise. If foreign single investor ownership is above 10%, the investment is considered as direct

13、investment, below this percentage it is considered as portfolio investment.YOUR COMPANY NAME or YOUR SITE ADDRESSOther CapitalA residual category that groups all the capital transactions that have not been included in direct investment, portfolio investment and reserves. It is divided into long-term

14、 and short-term capital and, because of its residual status, can differ from country to country.YOUR COMPANY NAME or YOUR SITE ADDRESSNon-negotiable instruments of a year or more like bank loans and mortgages.Financial assets of less than a year such ass currency, deposits and bills.Reserve AssetsIn

15、ternational liquidity or reserves held by the central authority of individual countries. Reserves include: monetary gold 货币性黄金special drawing rights特别提款权reserve position in the Fund 储备头寸foreign exchange外汇YOUR COMPANY NAME or YOUR SITE ADDRESSReserves AssestsQ: What is the function of this account?Se

16、e P38(Para1)The purpose of this account is to show how a surplus or deficit on the rest of the account is balanced. When a country runs a deficit on the rest of the account, usually these are two ways to finance it. Foreign countries can grant credit to eh deficit country, which allows the country t

17、o use the credit so as to balance the deficit. Another way is to draw on the deficit countrys official reserves, with payment effected in gold, foreign exchange or SDRs.YOUR COMPANY NAME or YOUR SITE ADDRESSNet Errors and OmissionsThe last part of the BOP, an account to make sure that the BOP actual

18、ly balance.Theoretically, the sum of the current account balance and the capital account balance must equal the official reserve accounts. As a matter of fact, differences between the two do occur because of statistical error, incomplete figures and smuggling. So this part is to fill the gap on the

19、bookkeeping artificially. YOUR COMPANY NAME or YOUR SITE ADDRESSEquilibrium of BOPA favorable BOP account means that neither surplus nor deficit occurs on a nations BOP account. The equilibrium has three implications: See P39 (Para 4) 1. trade equilibrium 2. current accounts equilibrium 3. a balance

20、 on the overall balance of payments statementYOUR COMPANY NAME or YOUR SITE ADDRESSAll countries want to realize a balanced trade first, which is the basis of a favorable BOP account. If no, they hope to cover the deficit by invisible trade(the other items in the current account) so as to achieve a

21、current account balance. If not, the capital account is going to be used to finance the gap. Finally, if it is still not, the government have to draw on their foreign reserve assets. Clearly, withdrawal on reserves should be used as a last resort.YOUR COMPANY NAME or YOUR SITE ADDRESSWhat is the sig

22、nificance of the analysis of the BOP?See P40YOUR COMPANY NAME or YOUR SITE ADDRESSHomeworkFinish the translation exercise.Finish exercise 1,2,5 on page 28 of the textbook.YOUR COMPANY NAME or YOUR SITE ADDRESSKey to Translation1. The balance of payments statement is an essential part to macro-econom

23、ic management.2. The balance of payments statement covers all economic transactions between all Chinese residents and non-residents.3. The monetary authorities of each country intervene, to varying degrees, in their respective foreign exchange markets.4. Much more demand on some currency will lead t

24、o its appreciation.5. The Euro is increasingly favored in the international money market. YOUR COMPANY NAME or YOUR SITE ADDRESSKey to Exercise 2Producer surplus is the net gain to producers from being able to sell a product through a market. It is the difference between the lowest price at which so

25、me producer is willing to supply each unit of the product and the actual market price that is paid, summed over all units that are produced and sold. The lowest price at which someone is willing to supply the unit just covers the extra (marginal) cost of producing that unit. To measure producer surp

26、lus for a product using real world data, three major pieces of information are needed. First, the market price. Second, the quantity supplied. Third, some information about the slope (or shape) of the supply curve. How would quantity supplied change if the market price decreased? Or, what are the ex

27、tra costs of producing each unit up to the actual quantity supplied? Producer surplus could then be measured as the area below the market price line and above the supply curve. YOUR COMPANY NAME or YOUR SITE ADDRESSFlows refer to income and expenditure or changes of outstanding assets and liabilitie

28、s.YOUR COMPANY NAME or YOUR SITE ADDRESSThe time period is arbitrary, but it is common practice to supply balance of payments data on a monthly, quarterly and yearly basis.The United States report quarterly.YOUR COMPANY NAME or YOUR SITE ADDRESSThe distinction is not on the basis of legal citizenshi

29、p but rather normal location of residence. The residents of a country comprise the central government, individuals, private non-profit bodies serving individuals, and enterprises, all defined in terms of residential relationship to the territory of that economy. YOUR COMPANY NAME or YOUR SITE ADDRES

30、SResidents of the country where they comemigrantstouristsmilitarydiplomatic personnelTheir transactions with abroad result in balance of payments entries(income), whereas payments they receive from or make to their home countries do not. YOUR COMPANY NAME or YOUR SITE ADDRESSForeign subsidiaries are

31、 regarded as residents of the country in which they are located. Thus sales by a parent firm to a foreign subsidiary result in balance of payments entries, even though the transaction takes place within a single corporation.YOUR COMPANY NAME or YOUR SITE ADDRESSInsurance covers risks that may occur

32、on movable goods during the course of shipment, on the carriers themselves, and other risks which endanger such as life and property. For example, international logistics involve insurance for carriers and the transported goods.YOUR COMPANY NAME or YOUR SITE ADDRESSTravel covers the goods and servic

33、es acquired from an economy by non-resident travelers for their personnel use during their stay in that economy. The most common goods and services are lodging, meals, entertainment and transportation within the economy, gifts, souvenirs, personal articles that travelers take out of the economies vi

34、sited.YOUR COMPANY NAME or YOUR SITE ADDRESSRemittances of immigrants and workers to their country of origin as well as gifts, dowries, inheritances, prizes, charitable contributions, etc.YOUR COMPANY NAME or YOUR SITE ADDRESSVoluntary subsidies, military aid, voluntary cancellation of debt, and contributions t international organization, indemnities imposed under peace treaties, technical assistance, taxes and fines.YOUR COMPANY NAME or YOUR SITE ADDRESS货币性黄金货币性黄金是指黄金作为流通手段和支付手段的时候，发挥其作用，此时我们叫货币性黄金。在一国的国际收支平衡表中，有关黄金交易一般出现