All other types of international capital flows shown in the financial account of the balance of payments belong to the group of other investments and are classified first by type of financial instrument, and then by sector of the domestic economy.
Other investments (other investments) are all other international investments not included in direct and portfolio investments.
Types of capital flows related to other investments differ from country to country, but the most significant of them are as follows:
Commercial loans (commercial credits) – claims and obligations arising from the provision of a loan by the supplier to the buyer of goods and services or preliminary payment by the buyer of goods and services not yet received. Commercial loans are usually associated with payment of foreign trade transactions and are short-term; Loans – financial assets arising from the fact that the lender directly provides the borrower with a certain amount of money. A distinctive feature of loans is that the lender providing them does not receive in return a document that could be traded on the financial market (for example, a bond). These are mainly loans for financing trade transactions, advances, mortgages, IMF loans, as well as financial leasing and repurchase agreements. Financial leasing belongs to this category on the grounds that the lease of goods with the possibility of their subsequent purchase is a kind of way to finance large-scale trade transactions. Return purchase agreements (repurchase agreement, REPO) are securities sales agreements at an agreed price, despite the fact that the seller accepts an obligation to subsequently redeem these securities at a fixed price on time. Thus, repurchase agreements are also a kind of short-term loan secured by securities. The use of IMF loans includes countries receiving various types of loans from this organization; Cash and deposits (cash and deposits) – banknotes and coins in circulation and used to make payments, demand deposits, savings, term and other deposits. The financial account of the balance of payments takes into account the receipt of cash national currency by non-residents and cash foreign currency by residents, as well as the opening of accounts by them, respectively, in national and foreign currencies.
Other assets include all other transactions between residents and non-residents not listed above, for example, such as subscribing to the capital of international organizations.
Brief conclusions. So, the capital account and financial transactions is a group of balance of payments items that record the international capital movement, with which the export and import of goods and services are financed. Structurally, it includes a capital transaction account – a group of balance of payments items that record capital transfers and the acquisition / sale of non-produced non-financial assets, and a financial account – a group of balance of payments items covering all transactions, as a result of which there is a transfer of ownership of external financial assets and liabilities of a given country. Capital transfers include the transfer of ownership of fixed assets related to the acquisition or use of fixed capital or providing for the cancellation of debt by the creditor. Direct investments include capital investments that lead to a steady influence on the part of an institutional unit – a resident of one economy (direct investor) on an institutional unit – a resident of another economy (direct investment enterprise). Portfolio investments show the relationship between residents and non-residents regarding the trade in financial instruments that do not give the right to control the object of investment. Other investments combine the rest of the international capital flows in the form of commercial loans, loans, cash and deposits.