Skip to content

Balance of Payments Glossary A-C

Skip to the top of the page

This page shows the Balance of Payments Glossary for entries A to C.

A - Acceptances

See ‘Bills and acceptances’.

Back to top

Accrued interest

A method of recording transactions to relate them to the period when the exchange of ownership of the goods, services or financial asset applies. For example, value added tax accrues when the expenditure to which it relates takes place, but HM Revenue and Customs (HMRC) receive the cash some time later. The difference between accruals and cash results in the creation of an asset and liability in the financial accounts, shown as amounts receivable or payable.

Back to top

Advance and progress payments

Payments made for goods in advance of completion and delivery of the goods.

Back to top


Branches, subsidiaries or associate companies.

Back to top

Allocation of SDRs

See ‘Special Drawing Rights’.

Back to top


A technique of deriving profit with little or no risk of loss by exploiting temporary misalignments in the price of financial instruments, or of one instrument in different markets.

Back to top


This term commonly refers to financial assets that are claims on non-residents, from whose point of view the same item is a liability to a UK resident. Among reserve assets, however, gold and SDRs have a value which exists independently of any corresponding liabilities. Real assets such as merchandise, although they may be entered in company accounts as assets, are seldom described as assets in balance of payments analysis.

Back to top

Associated companies

Companies in which the investing company has a substantial equity interest (usually this means that it holds between 10 per cent and 50 per cent of the equity share capital) and is in a position to exercise a significant influence on the company. (See ‘Subsidiary’).

Back to top

B - Balancing item

See ‘Net errors and omissions’.

Back to top

Bank of England – Issue Department

This part of the Bank of England deals with the issue of bank notes on behalf of central government. It was formerly classified to central government though it is now part of the central bank/monetary authorities sector. Its activities include, inter alia, market purchases of commercial bills from UK banks.

Back to top

Bank for International Settlements (BIS)

An international organisation which fosters international monetary and financial co-operation and serves as a bank for central banks.

The BIS fulfils this mandate by acting as:

  • a forum to promote discussion and policy analysis among central banks and within the international financial community

  • a centre for economic and monetary research

  • a prime counterparty for central banks in their financial transactions

  • agent or trustee in connection with international financial operations

Established on 17 May 1930, the BIS is the world’s oldest international financial organisation, which has its head office based in Basel, Switzerland.

The most recent BIS data used within the UK balance of payments accounts covers non-bank borrowing from banks in the following countries: Algeria, Argentina, Australia, Austria, Belgium, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong SAR, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Macedonia (FYR), Malaysia, Mexico, the Netherlands, New Zealand, Norway, the Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, the United Kingdom and the United States, plus the European Central Bank.

The data used for balance of payments purposes are locational banking statistics on a residence basis.

Back to top

Banking statistics

A term used in this publication to denote an integrated set of returns, covering all UK banks, and collected by the Bank of England. The returns were first introduced in late 1974 and during 1975. Since then, various reviews of the requirements of data from banks have been conducted and forms amended, introduced or dropped as necessary. The data collected cover all listed banks up to the end of 1981 and the revised group of institutions classified as UK banks from 1982 onwards. It collects, on a regular basis, extensive information relating to the levels of, and changes in, assets and liabilities. Revised banking returns were introduced from the end of 1997 to reflect the requirements of the IMF Balance of Payments Manual 5th edition and to remove the Channel Islands and the Isle of Man from the definition of the economic territory of the UK.

Back to top

Banks (UK)

Banks are defined as all financial institutions recognised by the Bank of England as UK banks. For statistical purposes, this includes:

  • institutions which have a permission under Part 4 of the Financial Services and Markets Act 2000 (FSMA) to accept deposits, other than:

    • credit unions

    • firms which have a permission to accept deposits only in the course of carrying out contracts of insurance in accordance with that permission

    • friendly societies

    • building societies

  • European Economic Area credit institutions with a permission under Schedule 3 to FSMA to accept deposits through a UK branch

  • the Banking and Issue Departments of the Bank of England (the latter from April 1998)

Prior to December 2001, banks were defined as all financial institutions recognised by the Bank of England as UK banks for statistical purposes, including the UK offices of institutions authorised under the Banking Act 1987, the Banking and Issue Departments of the Bank of England (the latter from April 1998), and deposit-taking UK branches of ‘European Authorised Institutions’. This includes UK branches of foreign banks, but not the offices abroad of these or of any British owned banks.
An updated list of banks appears on the Financial Services Authority website.

Back to top

Bills and acceptances

A bill is an unconditional order in writing addressed by the drawer to the drawee to pay the drawer a fixed sum on a specified date. A UK resident may draw a bill in sterling on a foreign resident representing credit extended by the UK resident to the foreign resident. If the UK resident sells the bill to a UK bank, generally at a price less than the nominal value of the bill, the bank is said to discount the bill, and the claim on the foreign resident is transferred to the UK bank.

A bill is known as an acceptance when the drawee accepts the bill. A UK bank may accept a bill on behalf of a foreign resident in which case the UK resident draws the bill on the UK bank and not on the foreign resident. The accepting bank has a claim on the foreign resident and expects to be paid by him before the bill matures.

Back to top


A financial instrument that usually pays interest to the holder. Bonds are issued by governments as well as companies and other institutions, for example, local authorities. Most bonds have a fixed date on which the borrower will repay the holder. Bonds are attractive to investors since they can be bought and sold easily in a secondary market. Special forms of bonds include deep discount bonds, equity warrant bonds, Eurobonds, and zero coupon bonds.

Back to top


The Balance of Payments Manual, 5th Edition, published in 1993 by the IMF.

Back to top


An unincorporated enterprise, wholly or jointly owned by a direct investor.

Back to top

British government stocks

Securities issued or guaranteed by the UK government; also known as gilts.

Back to top

Building societies

Building societies are mutual institutions specialising in accepting deposits from members of the public and in long-term lending to members of the public, mainly to finance the purchase of dwellings; such lending being secured on dwellings. Their operations are governed by special legislation which places restrictions on their recourse to other sources of funding and other avenues of investment.

Back to top

C - Capital account

The capital account consists of capital transfers (see ‘Transfers’) and acquisition/disposal of non-produced, non-financial assets (see ’Non-produced, non-financial assets').

Back to top

Capital transfers

See ‘Transfers’.

Back to top

Certificate of deposit

A short-term interest-paying instrument issued by deposit-taking institutions in return for money deposited for a fixed period. Interest is earned at a given rate. The instrument can be used as security for a loan if the depositor requires money before the repayment date.

Back to top

c.i.f. (cost, insurance and freight)

The basis of valuation of imports for Customs purposes, it includes the cost of insurance premiums and freight services. These need to be deducted to obtain the free on board valuation consistent with the valuation of exports which is used in the economic accounts.

Back to top

Collective investment institution (CII)

Incorporated (investment companies or investment trusts) and unincorporated undertakings (mutual funds or unit trusts) that invest the funds, collected from investors by means of issuing shares/units (other than equity), in financial assets (mainly marketable securities and bank deposits) and real estate. (See also ‘Trusts’).

Back to top

Commercial paper

This is an unsecured promissory note for a specific amount and maturing on a specific date. The commercial paper market allows companies to issue short-term debt direct to financial institutions who then market this paper to investors or use it for their own investment purposes.

Back to top

Commodity gold

See ‘Gold’.

Back to top

Commonwealth Development Corporation

A public corporation which finances development projects abroad.

Back to top

Compensation of employees

Total remuneration payable to employees in cash or in kind, and includes the value of social contributions payable by the employer.

Back to top

Coordinated Portfolio Investment Survey (CPIS)

A survey coordinated and disseminated by the International Monetary Fund (IMF). Participants in the CPIS collect a geographical breakdown of their portfolio investment assets.

Back to top

Counterpart items

Certain items in the balance of payments exist only as counterpart items, introduced to balance the inclusion of other items that do not fall naturally into the double-entry system. The allocation of Special Drawing Rights (SDRs) is an example of an artificial counterpart item introduced into the balance of payments to offset the corresponding increase in SDR holdings within official reserves (as SDRs are no one sector’s liabilities). (See also ‘Special Drawing Rights’).

Back to top


The provision of transportation services by resident operators between two foreign economies.

Back to top

Currency swaps

A currency swap, also known as a cross-currency interest-rate swap contract, consists of an exchange of cash flows related to interest payments and, at the end of the contract, an exchange of principal amounts in specified currencies at a specified exchange rate.

Back to top

Current account

The account of transactions in respect of trade in goods and services, income and current transfers.

Back to top

Current balance

The balance of current account transactions.

Back to top

Current transfers

See ‘Transfers’.

Back to top

Content from the Office for National Statistics.
© Crown Copyright applies unless otherwise stated.