Business question question what what does a surplus on

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Unformatted text preview: hat does a surplus on the capital account mean? account Is the long-term-short term distinction Is important? important? (Official) Reserve Account (Official) Reserve Reserve assets are those held by central banks and consist of : banks Gold Currencies Currencies and securities of foreign governments Claims on IMF (International Monetary Fund) Claims & SDRs (Special Drawing Rights) SDRs So balance looks like this So Credits Sales of gold reserves Sales of foreign Sales currencies, securities held by our central bank bank Reduction of SDRs or Reduction claims on IMF claims Debits Purchase of gold Sale of domestic Sale securities to foreign central banks or they increase holding of our currency currency Increase claims on Increase IMF or holdings of SDRs SDRs Errors and Omissions Errors In an ideal world, credits = debits Measurement is imperfect Some examples Mistakes in measurement Transfer prices Tax avoidance – money laundering, capital Tax flight, tax havens flight, Balances evened out Credits Current account C...
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