What is the financial account?

The financial account forms part of the “liabilities” side of the balance of payments. That is why “Income” is posted on the right-hand side (in credit) and “Expenditures” on the left (in debit).

Definition / explanation

“Expenses” include short-term payments abroad, such as payments by checks, bills of exchange and money orders. The expenses also include the liabilities to foreign countries that arise in an accounting period. (The liabilities can be defined as a later expense.)

The settlement of the liabilities is recorded in the credit of the financial account.

"Income" includes short-term payments from abroad and claims against foreign countries that arise in a billing period. (The receivables can be defined as revenue due later.)

The settlement of the receivables is posted in the debit of the financial account.

To understand the balance of payments, it is sufficient to show an “account” for the financial account. The Deutsche Bundesbank, on the other hand, subdivides the financial account into the following main categories: direct investments, securities investments, credit transactions this is broken down into short and long-term transactions and other transactions.

Direct investment

Participations (e.g. shares and other capital shares), long-term loans, short-term financial relationships with affiliated companies and the cross-border acquisition of real estate are recorded here.


This category includes securities investments such as B. Shares (excluding participations), the acquisition of investment and money market funds, money market papers and warrants1.

Financial derivatives

Finanzderivate (auch Derivatives, derivative Finanzinstrumente oder Derivative genannt) sind Finanztitel, deren Börsen- oder Marktpreis von der Entwicklung des Börsen- oder Marktpreises von Wertpapieren oder von der Veränderung der Marktzinssätze abhängt. Derivative sind Rechte (keine Wertpapiere), die der Absicherung von Kursrisiken oder auch der Spekulation dienen.

Credit transactions

This item includes the short-term and long-term financial relationships of domestic companies and private individuals with foreign countries, the foreign transactions of credit institutions and the short-term and long-term development aid loans.

Other investments

The other investments contain all capital inflows from abroad or all capital outflows abroad that are not included in the above categories (e.g. net premiums and payouts from life insurance companies).

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Further explanations on financial accounting