Capital Account

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What is a 'Capital Account'

A capital account is a national account that shows the net change in asset ownership for a nation. The capital account is the net result of public and private international investments flowing in and out of a country.

May also refer to an account showing the net worth of a business at a specific point in time.

BREAKING DOWN 'Capital Account'

The capital account includes foreign direct investment (FDI), portfolio and other investments, plus changes in the reserve account. The capital account and the current account together constitute a nation's balance of payments.

Since large capital inflows or outflows can have destabilizing effects on a nation's economy, many countries have controls in place to regulate capital account flows.

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RELATED FAQS
  1. What does a positive capital account balance mean?

    Learn about a capital account, the four categories of transactions that comprise it and the meaning of a positive capital ... Read Answer >>
  2. What is the difference between the current account and the capital account?

    Learn how to differentiate between the capital account and the current account, the two components of the balance of payments ... Read Answer >>
  3. How does a capital account illustrate the strength of investment markets for a country?

    Understand what a country's capital account is and how the capital account level can be used to gauge the strength of investment ... Read Answer >>
  4. How does a nation's balance of payments affect its capital stock?

    Find out how changes in a country's balance of payments can reflect changes in the capital stock of that nation's businesses ... Read Answer >>
  5. What does a negative balance in the capital account mean?

    Understand what a country's capital account represents and the significance of a negative, or deficit, balance in the capital ... Read Answer >>
  6. How does the balance of trade impact a nation's capital accounts balance?

    Find out how a country's capital account is related to the current account, the financial account, and the overall balance ... Read Answer >>
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