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The Capital/Financial Account of the BOP

The Capital/Financial of the balance of payments measures all international economic transactions of financial assets. It is divided into two major components, the Capital Account and the Financial Account.

The Capital Account made up transfers of financial assets and the acquisition and disposal of nonproduced/nonfinancial assets. This account has been introduced as a separate component in the International Monetary Fund’s balance of payments only recently.

The Financial Account consists of three components thus classified: direct investment, in which the investor exerts some explicit degree of control over the assets; portfolio investment, in which the investor has no control over the assets; and other asset investment.

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