Great video, I'd like to point out something that helped me. A credit is an increase in liabilities OR a decrease in assets. Just putting that OR helped me realise it's not both things simultaneously.
I am from india. Thank you so much sir you explain in a very good manner that everyone can understand easily. I am in trouble with this topic but you make my day.thanks a lot.👍
it was confusing me regarding WHO was doing the crediting and the debiting: was the local actor crediting the foreign actor, or was the foreign actor crediting the local actor? turns out it was the local actor crediting the foreign actor. so a credit is (somewhat confusingly) a decrease in assets for the local actor, and a debit an increase in assets. thank you for clarifying because this was driving me nuts.
At last a good one about BoP, highlighting the core element almost every other one misses: double accounting. (The not-understanding of which usually leads to the mistaken consclusion that the BoP balances because, basically, "what cash comes in [trade] must eventually go out [bonds etc]) One is wondering though, why the BoP is *named* so very misleadingly - the name "balance of PAYMENTS" indeed sounds like single accounting - that of cash movements only, like in a firm's cash flow statement. When the accounting is double, and in fact records both the economic substance and the related cash movements of a transaction, it's actively misleading to call that balance of payments -- it should be balance of *transactions* or similar.
Dear Mike, thanks this was really clear, but could you please give an example of an entry in the official settlements account, for example when the national bank buys foreign reserve. What is the credit entry and what is the debit entry in that case?
Say the central bank in one country decides to increase its foreign exchange reserves, it could do so buy purchasing, for example, a US treasury bond (this would increase the central bank's USD holdings). The purchase of the bond would then be a debit in the BOP (the country imports a foreign asset). The payment made to the American bank that has sold the bond to the central bank would be a BOP credit (the country exports a home asset).
crediting an interest or a dividend are forms of income. they are thus recorded on the current account, not the capital account. hence, there would be no change in the assets or liabilities. it would be noted on the credit side of CURRENT AND NOT CAPITAL account.
I really wish teachers would quit this ridiculous use of white/chalk boards rather than prepared slides. Half the time in this video is spent waiting for him to write the damn thing on the board. Such a waste of time.
Great video, I'd like to point out something that helped me. A credit is an increase in liabilities OR a decrease in assets. Just putting that OR helped me realise it's not both things simultaneously.
Please. I was so miserably failying my finance class but you saved my life. Put some ad on it I will happily watch it for you. Please.
I am from india. Thank you so much sir you explain in a very good manner that everyone can understand easily. I am in trouble with this topic but you make my day.thanks a lot.👍
Thank you so much sir, i always frequent your videos and channel for all my international trade and finance doubts!!
Thank you! I finally understand Balance of Payments now. Great job Mike🤓
thank you so much sir. for me double bookkeeping system concept was very confusing and you done it very easly
it was confusing me regarding WHO was doing the crediting and the debiting: was the local actor crediting the foreign actor, or was the foreign actor crediting the local actor? turns out it was the local actor crediting the foreign actor. so a credit is (somewhat confusingly) a decrease in assets for the local actor, and a debit an increase in assets. thank you for clarifying because this was driving me nuts.
Mike, you're the bomb. Thanks!
Thank you sir , I was not able to understand the concept , and was having so much difficulty , you made it so easy thank you
You're the man, Mike, thanks
Thank you so much! You are really saved my life!! You are one of the best teachers.
From India..Thanks a lot for this sir
Incredible quality content!
that was really clear! thank you so much!
we love you from egypt 😍😍
eh da ya8ali
At last a good one about BoP, highlighting the core element almost every other one misses: double accounting.
(The not-understanding of which usually leads to the mistaken consclusion that the BoP balances because, basically, "what cash comes in [trade] must eventually go out [bonds etc])
One is wondering though, why the BoP is *named* so very misleadingly - the name "balance of PAYMENTS" indeed sounds like single accounting - that of cash movements only, like in a firm's cash flow statement. When the accounting is double, and in fact records both the economic substance and the related cash movements of a transaction, it's actively misleading to call that balance of payments -- it should be balance of *transactions* or similar.
What about unilateral transactions
it is very helpful
thank you
Very very helpful ! Thanks
Dear Mike, thanks this was really clear, but could you please give an example of an entry in the official settlements account, for example when the national bank buys foreign reserve. What is the credit entry and what is the debit entry in that case?
Say the central bank in one country decides to increase its foreign exchange reserves, it could do so buy purchasing, for example, a US treasury bond (this would increase the central bank's USD holdings). The purchase of the bond would then be a debit in the BOP (the country imports a foreign asset). The payment made to the American bank that has sold the bond to the central bank would be a BOP credit (the country exports a home asset).
Thank you! this was very helpful
No. You credit a interest and dividend received from abroad, which would be an increase in assets. You're confusing me man
crediting an interest or a dividend are forms of income. they are thus recorded on the current account, not the capital account. hence, there would be no change in the assets or liabilities. it would be noted on the credit side of CURRENT AND NOT CAPITAL account.
I really wish teachers would quit this ridiculous use of white/chalk boards rather than prepared slides. Half the time in this video is spent waiting for him to write the damn thing on the board. Such a waste of time.
yuh a rude man. be grateful for free info.