Skip to content

Balance of Payments Glossary R-Z

Skip to the top of the page

This page shows the Balance of Payments Glossary for entries R to Z.

R - Refinanced export credit

Identified long-term credit extended for UK exports initially by banks and refinanced with the ECGD, the Trustee Savings Banks and the Central Trustee Savings Bank.

Back to top

Reinvested earnings

The direct investor’s share of earnings not distributed as dividends (by subsidiaries) or branch profits. As this income remains with the foreign subsidiary or branch (it is reinvested by the parent) an amount will appear in the financial account equal to (and with opposite sign) the corresponding entry within direct investment income.

Back to top

Related companies

Branches, subsidiaries, associates or parents.

Back to top

Remittances

Current transfers in cash or in kind sent by households resident in one economy to households resident in another economy. Closely related to BPM5 concept workers remittances which are current transfers sent by migrants who are employed in new economies and are considered to be residents of their new economy to their home economy.

Back to top

Repo/reverse repo

This is short for ‘sale and repurchase agreement’. One party agrees to sell bonds or other financial instruments to other parties under a formal legal agreement to repurchase them at some point in the future – usually up to six months – at a fixed price. Reverse repos are the counterpart asset to any repo liability. Repo/ reverse repo transactions are generally treated as borrowing/lending within other investment, rather than as transactions in the underlying securities. The exception being for banks, where repos are recorded as deposit liabilities. Banks’ reverse repos are recorded as loans, the same as for all other sectors.

Back to top

Reserve assets

Short-term assets which can be very quickly converted into cash. They comprise the UK’s official holdings of gold, convertible currencies, Special Drawing Rights, and changes in the UK reserve position in the IMF. Also included between July 1979 and December 1998 are European Currency Units acquired from swaps with the European Cooperation Fund, EMI and the ECB. Reserve assets were referred to as ‘official reserves’ in editions of the Pink Book prior to 1998.

Back to top

Reserve position in the Fund

The UK’s position in the IMF’s General Resources Account. This position is the sum of the UK’s reserve tranche purchases, and any indebtedness to the Fund (under a loan agreement) that is readily payable to the UK.

Back to top

Residency

UK residents are those with a centre of economic interest within the UK of at least one year’s duration – nationality does not play a part in determining residency status. There are a number of exceptions to the standard residency classification: regardless of length of stay, UK personnel of UK embassies and military bases abroad are deemed to be residents of the UK (conversely foreign personnel of other nations’ embassies and military bases in the UK are classed as non-residents), as are students studying abroad or patients being treated abroad who are normally resident in the UK. (See also ‘Offshores’.)

Back to top

Royalties

These form part of trade in services. They represent payments for services by, or to, UK residents in respect of the right to use processes and other information, for example, licences to use patents, trade marks, designs, or copyrights. Sales and purchases of patents are included within the capital account.

Back to top

Rural Payments Agency (RPA)

The UK government agency which operates the support arrangements of the EU Common Agricultural Policy within the UK. This replaced the Intervention Board for Agricultural Produce (IBAP).

Back to top

S - Securities dealers

Securities and futures dealers are those institutions whose main activity is dealing in securities and futures either on their own account or on behalf of customers and clients. This activity also includes stock exchange money brokers, inter-dealer brokers and dealing in commodities for investment purposes. They should not be confused with monetary financial institutions (banks and building societies) that are licensed as able to take deposits.

Back to top

Security

Security against loans involves the depositing of a document or asset which is retained by the bank as a charge for an advance. This form of security may include stocks and share certificates, debentures, and insurance policies.

Back to top

Smuggling

Smuggling is the importation of goods acquired duty free or duty paid in another country for re-sale in the UK without payment of UK duty and (where appropriate) VAT. (See also ‘MTIC’).

Back to top

Special Drawing Rights (SDRs)

These are reserve assets created and distributed by decision of the members of the IMF. Participants accept an obligation to provide convertible currency, when designated by the IMF to do so, to another participant, in exchange for SDRs. Only countries with a sufficiently strong balance of payments are so designated by the IMF. SDRs may also be used in certain direct payments between participants in the scheme and for payments of various kinds to the IMF.

Back to top

Spread earnings

Net spread earnings are the part of market making activities that represent payment for the provision of a service. The value of the spread earning for each transaction is calculated as the margin earned between the transaction price and the mid-market price at the time of the transaction. This represents the ‘added value’ gained from market making activities. Spread earnings can be made on, for example, foreign exchange, securities and derivatives transactions.

Back to top

Stock lending

Lending of securities by long-term holders or custodians such as banks, pension funds or insurance companies when securities are in short supply.

Back to top

Subsidiary

A registered company in which another registered company has ownership of the majority of the voting share capital, that is, greater than 50 per cent.

Back to top

Subsidies

Current unrequited payments made by general government or the EU to enterprises. Those made on the basis of a quantity or value of goods or services are classified as ‘subsidies on products’. Other subsidies based on levels of productive activity (for example, numbers employed) are designated ‘Other subsidies on production’.

Back to top

Swaps

See ‘Interest rate swaps’ and ‘Currency swaps’.

Back to top

T - Trade credit

See ‘Export credit’ and ‘Import credit’.

Back to top

Trade in goods

Trade in goods covers general merchandise, goods for processing, repairs on goods, goods procured in ports by carriers and commodity gold (see ‘Gold’). General merchandise is defined for balance of payments purposes as covering, with a few exceptions, all movable goods for which actual or imputed changes of ownership occur between residents and non-residents.

Back to top

Trade in services

Provision of services between UK residents and non-residents, and transactions in goods which are not freighted out of the country in which the transactions take place, for example purchases for local use by foreign forces in the UK and by UK forces abroad, and purchases by tourists. Transactions in goods which are freighted into/ out of the UK are included under trade in goods.

Back to top

Transfers

Transfers are payments or receipts where there is no corresponding exchange of an actual good or service. These transfers are split between current transfers, which form part of the current account, and capital transfers which form part of the capital account. Most transfer payments are general government transfers; that is, receipts from and payments to institutions of the EU.

Back to top

Travel

The travel account gives the earnings from, and expenditure on, international tourism and business and other travel, but excludes transport between the UK and other countries (included within the transportation account). An international traveller is defined as a resident of one country who visits another country and stays there for a period of less than 12 months. This definition excludes travellers who visit another country to take up pre-arranged employment or education there, military and diplomatic personnel, merchant seamen and airline crews on duty.

Back to top

Treasury bills

Short-term securities or promissory notes that are issued by government in return for funding from the money market. In the UK every week, the Bank of England invites tenders for sterling Treasury bills from the financial institutions operating in the market. ECU/euro-denominated bills were issued by tender each month but this programme has now wound down; the last bill was redeemed in September 1999. Treasury bills are an important form of short-term borrowing for the government, generally being issued for periods of three or six months.

Back to top

Trusts (unit and investment)

Unit trusts are institutions through which investors pool their funds to invest in a diversified portfolio of securities. Individual investors purchase units in the fund representing an ownership interest in the large pool of underlying assets, that is, they have an equity stake. The selection of assets is made by professional fund managers. Unit trusts therefore give individual investors the opportunity to invest in a diversified and professionally-managed portfolio of securities without the need for detailed knowledge of the individual companies issuing the stocks and bonds. Unit trust units are issued and bought back on demand by the managers of the trust, the value of the unit reflecting the value of the underlying pool of securities.

Investment trusts are institutions that invest capital in a wide range of other companies’ shares. Investment trusts issue shares (which are listed on the stock market) to raise this capital. The price of shares is driven by the usual market forces.

Unit trusts are ‘open-ended funds’ which means the fund gets bigger as more people invest and gets smaller as people withdraw their money. Investment trusts are ‘close-ended funds’ because there are a set number of shares and this number does not change regardless of the number of investors. (See also ‘Collective investment institutions’.)

Back to top

U - UK Export Finance

A non-ministerial government department, classified to the public corporations sector, the main function of which is to provide insurance cover for export credit transactions.

Back to top

V - Very short-term financing facility (VSTFF)

This is a facility available within the EMS where a central bank makes short-term credit facilities in its own currency available to another central bank.

Back to top

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