The International Monetary Fund and Balance of Payments

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Recommended: Importance of statistics in business decision making

Purchases of products and services are not always restricted within the borders of a single country. As 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 (U.S.) for Chinese-made goods would be considered an export to China and an import to the U.S. even if it is purchased by a consumer in his hometown. In order to complete this transaction, an exchange of goods, services, or money between the U.S. and China must be made. Considering the U.S.-China example, in theory the U.S. BOP account would record an increase in U.S. merchandise imports and China would consider it as a merchandise export in its BOP account (Eiteman et al., 2010).
This paper will address the relevant data included in the BOP accounts used by different entities to make decisions. It will also include an assessment of the main reporting agency and its role in reporting statistical information worldwide. Finally, it will address the various types of foreign exchange exposure linked with the BOP.

Balance of payments data summarizes all international transactions for a country over a specified time period (Eiteman et al., 2010). Measurements included in the BOP can significantly impact decisions made by various governments, multinational companies, investors, and consumers alike (Eiteman et al., 2010). For example, governments use BOP data as they set economic policies, manage currency exchange and interest rates, and gauge their competitiveness in the global market (Eiteman et al., 2010). Global corporations make use of the data to determine the importance of specific trades and financial...

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...(2010). Multinational Business Finance. (12th ed.). Boston, MA: Pearson Education, Inc.
International Monetary Fund (IMF). (n.d.a). About the IMF. Retrieved March 9, 2014, from http://www.imf.org/external/about.htm
International Monetary Fund (IMF). (n.d.b). Balance of payments and international investment position statistics. Retrieved March 9, 2014, from http://www.imf.org/external/np/sta /bop/bop.htm
International Monetary Fund (IMF). (n.d.c). Our work. Retrieved March 9, 2014, from http://www.imf.org/external/about/ourwork.htm
International Monetary Fund (IMF). (n.d.d). Tackling current challenges. Retrieved March 9, 2014, from http://www.imf.org/external/about/onagenda.htm
International Monetary Fund (IMF). (n.d.e). United States balance of payments summary. Retrieved March 8, 2014, from http://elibrary-data.imf.org/DataReport.aspx?c=7183654 &d =33060&e=141761

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