Mastering Financial Accounts

A financial account is a component of a country's balance of payments that covers claims on or liabilities to nonresidents, specifically concerning financial assets.

The components of a financial account include direct investment, portfolio investment, and reserve assets broken down by sector.

Nonresidents' claims made on residents' financial assets are recorded as liabilities.

<p>The financial account serves as a tracking mechanism for shifts in international asset ownership.</p> Signup and view all the answers

<p>The financial account differs from the capital account in its focus on claims and liabilities related to financial assets.</p> Signup and view all the answers