-
Essay / The International Monetary Fund and the Balance of Payments
Purchases of products and services are not always limited within the borders of a single country. When consumers in one country transact with businesses in other countries, the balance of payments (BOP) keeps a record of the exchanges (Eiteman, Stonehill, & Moffett, 2010). For example, a purchase made in the United States for products manufactured in China would be considered an export to China and an import to the United States, even if purchased by a consumer in their hometown. In order to complete this transaction, an exchange of goods, services, or money between the United States and China must occur. Looking at the example of US-China relations, in theory the US balance of payments account would record an increase in imports of US goods and China would view this as an export of goods in its balance of payments account (Eiteman et al., 2010). This article will discuss the relevant data. included in the balance of payments accounts used by different entities to make decisions. It will also include an assessment of the main information agency and its role in communicating statistical information globally. Finally, it will discuss the different types of exposure to exchange rate risk linked to the balance of payments. Balance of payments data summarizes all international transactions of a country over a specified period of time (Eiteman et al., 2010). Measures included in the balance of payments can have a significant impact on decisions made by various governments, multinational companies, investors and consumers (Eiteman et al., 2010). For example, governments use balance of payments data to set their economic policies, manage exchange and interest rates, and assess their competitiveness in the global market (Eiteman et al., 2010). Global companies use data to determine the importance of specific business and financial transactions...... middle of paper ......(2010). Financing of multinational companies. (12th ed.). Boston, MA: Pearson Education, Inc. International Monetary Fund (IMF). (nda). About the IMF. Accessed March 9, 2014, from http://www.imf.org/external/about.htmInternational Monetary Fund (IMF). (sdb). Balance of payments and international investment position statistics. Accessed March 9, 2014, from http://www.imf.org/external/np/sta /bop/bop.htmInternational Monetary Fund (IMF). (ndc). Our work. Accessed March 9, 2014, from http://www.imf.org/external/about/ourwork.htmInternational Monetary Fund (IMF). (ndd). Meet current challenges. Accessed March 9, 2014, from http://www.imf.org/external/about/onagenda.htmInternational Monetary Fund (IMF). (nde). Summary of the United States balance of payments. Retrieved March 8, 2014 from http://elibrary-data.imf.org/DataReport.aspx?c=7183654 &d =33060&e=141761