This page shows the Balance of Payments Glossary for entries A to C.
- A - Acceptances
- Accrued interest
- Advance and progress payments
- Affiliates
- Allocation of SDRs
- Arbitrage
- Assets
- Associated companies
- B - Balancing item
- Bank of England – Issue Department
- Bank for International Settlements (BIS)
- Banking statistics
- Banks (UK)
- Bills and acceptances
- Bond
- BPM5
- Branch
- British government stocks
- Building societies
- C - Capital account
- Capital transfers
- Certificate of deposit
- c.i.f. (cost, insurance and freight)
- Collective investment institution (CII)
- Commercial paper
- Commodity gold
- Commonwealth Development Corporation
- Compensation of employees
- Coordinated Portfolio Investment Survey (CPIS)
- Counterpart items
- Cross-trades
- Currency swaps
- Current account
- Current balance
- Current transfers
A - Acceptances
See ‘Bills and acceptances’.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.Advance and progress payments
Payments made for goods in advance of completion and delivery of the goods.Affiliates
Branches, subsidiaries or associate companies.Allocation of SDRs
See ‘Special Drawing Rights’.Arbitrage
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.Assets
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.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’).B - Balancing item
See ‘Net errors and omissions’.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.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:
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a forum to promote discussion and policy analysis among central banks and within the international financial community
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a centre for economic and monetary research
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a prime counterparty for central banks in their financial transactions
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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.
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.Banks (UK)
Banks are defined as all financial institutions recognised by the Bank of England as UK banks. For statistical purposes, this includes:
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institutions which have a permission under Part 4 of the Financial Services and Markets Act 2000 (FSMA) to accept deposits, other than:
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credit unions
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firms which have a permission to accept deposits only in the course of carrying out contracts of insurance in accordance with that permission
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friendly societies
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building societies
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European Economic Area credit institutions with a permission under Schedule 3 to FSMA to accept deposits through a UK branch
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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.
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.
