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A summary of all of a country's international transactions for goods and services, financial instruments and investments. In theory, this balance will be zero because obligations or assets held abroad will increase or decrease to achieve a balance. An important subcategory of the balance of payments is the balance of trade, which is the net difference between the value of merchandise exports and imports. A more comprehensive trade balance is the current account balance which includes services as well as merchandise. The state of a nation's balance of payments, balance of trade, or current account balance may provide an indication of the likely strength or weakness of its currency and the degree of flexibility the central bank has in conducting monetary policy. A capital account measures a country's borrowing and lending.
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