Skip to content

Balance of Payments Glossary G-K

Skip to the top of the page

This page shows the Balance of Payments Glossary for entries G to K.

G - Gold

In the accounts, a distinction is drawn between gold held as a financial asset (financial gold) and gold held like any other commodity (commodity gold). Transactions in commodity gold are recorded in the trade in goods account and include foreign trade in finished manufactures together with net domestic and foreign transactions in gold moving into or out of finished manufactured form (that is, for jewellery, dentistry, electronic goods, medals and proof – but not bullion – coins).

Banking-type assets and liabilities denominated in gold, including reserve assets are treated as financial gold transactions and included in the financial account. The distinction between commodity and financial gold differs from that drawn by the IMF, in its Balance of Payments Manual(5th edition, 1993), between non-monetary and monetary gold. The UK has obtained an exemption from adopting the BPM5 recommendations on treatment of gold in order to avoid distortion of its trade in goods account by the substantial transactions of the London Bullion Market.

The treatment of non-monetary gold was reviewed as part of the worldwide process to revise the IMF Balance of Payments Manual Sixth Edition. The proposal is that the concept of non-monetary gold is replaced by two categories – allocated gold (a commodity) and unallocated gold (a financial instrument). UK balance of payments will continue current practice until the treatments defined in the revised manual are implemented.

Back to top

H - Hedging

Hedging is accomplished by the temporary purchase or sale of futures/swaps contracts to offset movements in the position or anticipated position in the cash markets. For example, this may benefit banks, financial institutions, pension funds and corporate treasuries who hold interest rate, exchange rate or stock price sensitive assets or liabilities.

Back to top

Holding companies

A holding company is a company that usually confines its activities to owning stock in and supervising management of other companies. A holding company usually owns a controlling interest in the companies whose stock it holds. Holding companies exist for legal, commercial and tax reasons. In line with international standards, holding companies are classified as other financial intermediaries.

Back to top


Individuals or small groups of individuals as consumers and in some cases as entrepreneurs producing goods and market services.

Back to top

I - Import credit

Credit extended to UK institutions by non‑residents, primarily in connection with UK imports.

Back to top


The income account forms part of the current account and consists of compensation of employees and investment income, both of which have separate entries in this glossary.

Back to top

Inter-company accounts

Accounts recording transactions between parent and subsidiary or associated companies, and balances owed by one to the other.

Back to top

Interest rate swaps

An obligation between two parties to exchange interest-related payments in the same currency from fixed rate into floating rate, or vice versa, or from one type of floating rate to another. A swap can be used to reshape the coupon payments of either new or existing debt. The only movement of funds is a net transfer of interest payments between the two parties. The interest payments are calculated on an agreed principal amount, which is not exchanged. The settlement receipts/payments on UK banks’ interest rate swaps appear in the financial account under financial derivatives.

Back to top

International investment position (IIP)

The international investment position records end of period balance sheet levels of UK external assets and liabilities. The IIP consists of direct investment, portfolio investment, other investment and reserve assets. In the 2010 and 2011 editions, for the first time, financial derivatives business of UK banks and securities dealers respectively have been incorporated into the main aggregates of the IIP. Data for insurance companies, pension funds, unit trusts, investment trusts, open-ended investment companies, finance leasing companies, credit grantors, factoring companies and building societies are not included in the main aggregates for the UK’s international investment position. The financial derivatives balance sheet for all sectors is published separately in table FD of the Pink Book.

Back to top

International Monetary Fund (IMF)

A Fund set up as a result of the Bretton Woods Conference of 1944 and which began operations in 1947. It includes most of the major countries of the world. The Fund was set up to supervise the fixed exchange rate system agreed at Bretton Woods and to make available to its members a pool of foreign exchange resources to assist them when they have balance of payments difficulties. (See also ‘Special Drawing Rights’).

Back to top

Intervention Board for Agricultural Produce (IBAP)

The UK government agency which used to operate the support arrangements of the EU Common Agricultural Policy within the UK. It has now been replaced by the Rural Payments Agency (RPA).

Back to top


In a balance of payments context this is categorised as either direct, portfolio or other investment. See appropriate headings for definitions.

Back to top

Investment income

All investment income accruing to UK residents from non-residents or payable abroad by UK residents after allowing for depreciation. The balance on credits and debits equals ‘net property income from abroad’ as shown in the national accounts.

Back to top

Investment trust

See ‘Trusts’.

Back to top

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