The capital and financial account Flashcards
1
Q
Five components of CAFA:
A
- Net portfolio investment
- Net direct investment
- Financial derivatives
- Net other investments
- Net reserve assets
2
Q
Net portfolio investment
A
Records transactions involving less than 10% investment in a company and sale/purchase of debt. (Purchase of shares by households)
3
Q
Net direct investment
A
Records the creation of new assets and liabilities in a foreign country, including the setting up of a production facility or purchasing more than 10% of a company’s shares. (Corporations expanding overseas).
4
Q
Financial derivatives
A
Records complex financial instruments that create assets or liabilities
5
Q
Net other investments
A
Investment flows that do not quite fit in the other categories. (Trade credit, delay of payments)
6
Q
Reserve assets
A
RBA and government transactions involving foreign currency and contributions to the IMF and UN.
