Foreign exchange control under the capital account refers to the control of various foreign exchange borrowing and lending items recorded under the capital account in the balance of international payments. Under this item, foreign exchange is not freely convertible, and accordingly , all foreign exchange borrowings and loans under the current account can be freely exchanged. Information: Balance of payments

1. Concept of balance of payments

The balance of payments refers to the economic balance between a country’s residents and foreign residents within a certain period of time (usually one year). A systematic record of the monetary value of a transaction. The so-called "residents", according to the definition of the International Monetary Fund, include general governments, individuals, enterprises, and non-profit institutions. The so-called economic transactions generally refer to the exchange of value, the transfer of goods, services and assets from one country to another, as well as the corresponding monetary payments and income. There is also a unilateral transfer account.

The balance of payments is a flow concept, and it must be specified which period it is. The balance of payments is one of the most important economic indicators in an open economy.

2. Balance of Payments

The balance of payments is a statistical table that records, classifies, and organizes the international balance of payments of a country or region in a specific form. Details.

Principle of preparation: double-entry bookkeeping

Accounting method:

(1) All items that generate foreign exchange earnings of the country are credited and recorded as " " ( (can be omitted)

(2) All items that cause the country’s foreign exchange expenditures are debited and recorded as “-”

The main contents of the balance of payments statement:

(1) Current Account

The current account mainly reflects the transfer of actual resources between one country and other countries and is the most important item in the international balance of payments. The current account includes four items: goods (trade), services (intangible trade), income and unilateral transfer (current transfer). A current account surplus indicates that the country is a net lender, and a current account deficit indicates that the country is a net borrower.

(2) Capital and financial items

Capital and financial items reflect international capital flows, including long-term or short-term capital outflows and capital inflows. It is the second largest category of items in the balance of payments.

Capital items include capital transfers and the acquisition or sale of non-production and non-financial assets. The former is mainly investment donations and debt write-offs; the latter is mainly land and intangible assets (patents, copyrights, trademarks, etc.) Buy or sell.

Financial accounts include direct investment, securities investment (indirect investment) and other investments (including international credit, advances, etc.).

(3) Net errors and omissions

In order to make the total debits and total credits of the balance of payments equal, the compiler artificially sets up this item in the balance sheet to Offset the net debit balance or the net credit balance.

(4) Reserves and related items

Reserves and related items include foreign exchange, gold and allocated Special Drawing Rights (SDR)

Special Drawing Rights It is a new international reserve asset created with the International Monetary Fund as the center and using the form of international financial cooperation. The International Monetary Fund (IMF) is an accounting unit allocated to member states based on the share paid by each member state. It was officially issued by the IMF in 1970. The SDR allocated to each member state can be used as a reserve asset to make up for international receipts. deficit and can also be used to repay IMF loans. Also known as "paper gold".

Calculation formula:

Total balance of international payments = current account balance, capital and financial account balance, net errors and omissions

Changes in reserve assets of total international balance of payments =0

The difference of each item = the credit number of the item minus the debit number

Foreign exchange control: The country passes laws or regulations to regulate international settlement, foreign exchange receipts and payments, sales and exchange rates, etc. Foreign exchange business activities are managed and restricted with the purpose of effectively using foreign exchange, preventing foreign exchange speculation, limiting capital inflows and outflows, improving the balance of payments and stabilizing exchange rates.

Foreign exchange control is the product of the development of international economic relations to a certain stage. In order to balance the international balance of payments and deal with unstable factors in the international financial field, countries around the world have implemented foreign exchange controls to varying degrees.

The foreign exchange controls under the capital account currently implemented in our country are to prevent financial risks and stabilize the domestic economic order. Since my country's commercial banks are not sufficiently commercialized and financial regulatory rules are not yet complete, appropriate management of foreign exchange under the capital account is a need for current economic development

Balance of Payments: Balance of Payments Accounting statements prepared in accordance with specific account classifications and double-entry accounting principles.

1. Specific Account Classification

Current Account: An account that records the international flow of actual resources.

1) Goods: general commodities, goods to be processed, cargo repairs, goods purchased at ports by various means of transportation and non-monetary gold

2) Services: transportation, tourism, Communications, finance, computer services, expropriation of exclusive rights, franchising and other business services

3) Income:

First, employee compensation paid to non-resident workers;

Second, income and expenditures related to external financial assets and liabilities under investment income. Including income and expenditures from direct investment, portfolio investment, other investments, and official reserves. Including profits from direct investment, equity dividends, and debt interest. Capital gains and losses should be recorded in the financial account.

4) Current transfer: actual resources or financial products provided free of charge, including transfers excluding capital ownership (capital transfers are classified under the capital account)

Capital and financial accounts: Yes The account used to record the international liquidity of asset ownership

1) Capital Account (Capital Account)

a. Capital transfer: Capital transfer in which the transfer of ownership of fixed assets is actively linked to or conditioned upon it

b. Acquisition and abandonment of non-production, non-financial assets: transfer of intangible assets, such as patents, copyrights, trademarks, distribution rights, etc.

2) Financial Account: ownership transactions that change the ownership of external assets and liabilities

a. Direct investment: An investor has a permanent interest in a business in another economy. Directly establish or hold shares (more than 10)

b. Securities investment: stocks, bonds, financial derivatives, etc.

c. Reserve assets: foreign exchange assets, monetary gold, special drawing rights, IMF reserve positions, other claims

d. Errors and omissions accounts: offsetting accounts due to statistical problems, artificial misreporting, etc.

2. The three major rules of double-entry accounting:

1) Any transaction must involve two aspects: debit and credit: if there is a loan, there must be a credit, and the credit must be equal

2 ) Debit: Both real resources and financial assets represent an increase in holdings

3) Credit: Both real assets and financial assets represent a decrease in holdings

(3) Balance of international payments and international balance of payments

1. Autonomous Transactions and Compensatory Transactions

1) Autonomous Transactions: Transactions conducted by individuals or enterprises for some autonomous purpose.

2) Compensatory Transactions: external borrowing or use of official reserves to make up for the balance of payments deficit

2. The balance of international payments and the international balance of payments are both horizontal

1) The international balance of payments: the balance of international payments, that is, the autonomous transaction balance is zero. However, it is difficult to accurately distinguish between autonomy and compensation statistically and conceptually. It is just a way of thinking and difficult to put into practice.

2) Balance of payments balance: an independent balance of payments balance when the domestic economy is in equilibrium, that is, full employment and price stability are achieved domestically, and a balance of payments balance is achieved abroad. It is a comprehensive policy goal for a country to maximize welfare.

(4) Quantitative and qualitative analysis of the balance of payments imbalance

Quantitative analysis: the caliber of the balance of payments imbalance

1. Balance of trade balance: balance of import and export of commodities (goods)

Analytical significance:

1) Trade balance accounts for a large proportion of the entire international balance of payments and can be regarded as Approximate representation of the balance of payments

2) The import and export of goods comprehensively reflects a country's industrial structure, product quality and labor productivity, and reflects the international competitiveness of the country's industry.

2. Current account balance of payments: including the balance of trade balance, services, income and current transfer balance

Analytical significance: Comprehensive reflection of a country's import and export status, as a basis for formulating international balance of payments policies and industrial policies Basis

3. Capital and financial account balance

Analytical significance

1) It reflects the degree of openness of a country’s capital market and the degree of development of its financial market, and provides information for the adjustment of a country’s monetary policy and exchange rate policy. Useful reference.

2) There is a financing relationship between the capital and financial accounts and the current account, which reflects the status and financing capacity of the current account

Important issue: Financing of the capital and financial accounts and the current account Weakening of relationship

1. Fundamental reasons: The main influencing factors of capital and financial accounts are domestic and foreign investment yields, interest rates, exchange rates, inflation rates, tax rates, tax policies and risk factors.

2. The main reasons:

First, financing is restricted by many factors.

1) When it is difficult for a country to attract foreign capital inflows, it can only use official reserves for financing, but a country's official reserves are limited.

2) When a country mainly provides financing with foreign capital, there will be problems with the stability and repayment of this financing method, which may cause a break in the capital chain and a debt crisis.

Second, capital flows have independent movement laws and are no longer attached to the current account but are passively determined by it.

Third, in the financing relationship between the two, the two major accounts interact with each other through debt and income factors, which may form a debt crisis. (The capital flow generated after the capital account provides financing for the current account will cause corresponding changes in the income account, such as equity dividends, bond interest, etc. If the current account deficit is too large, it will cause excessive external debt, and the resulting interest payments will also increase. The current account will become larger and larger, thereby deteriorating the current account, forming a vicious circle)

4. Comprehensive account balance: the balance after withdrawing official reserves

Analytical significance:

1) Measuring the pressure caused by a country's official reserves in the balance of payments is important for maintaining appropriate fluctuations in the exchange rate significance.

2) It comprehensively reflects the status of independent international balance of payments and is an indicator for comprehensively measuring and analyzing the status of international balance of payments