balance of payments business definition

The record of money payments between one country and other countries. Balance of payments is more inclusive than balance of trade because balance of payments comprises foreign investment, loans, and other cash flows as well as payments for goods and services. A country's balance of payments has a significant effect on its currency value in relation to other currencies. It is of particular interest to individuals who own foreign investments or who own domestic investments in companies dependent on exports. See also capital account 2.