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Double-entry bookkeeping and balance of payments: the need for developing a new approach

Author

Listed:
  • Edoardo Beretta

    (USI - Università della Svizzera italiana = University of Italian Switzerland)

  • Alvaro Cencini

    (USI - Università della Svizzera italiana = University of Italian Switzerland)

Abstract
On the basis of the identity between each country's global imports (commercial and financial) and exports (commercial and financial), which is one of the fundamental economic principles of the balance of payments, the paper highlights why and how the leading account of transactions from/to the rest of the world needs to be reformed. As a strategic goal, the balance of payments should finally move beyond its current purely statistical and simple-entry bookkeeping approach in order to improve its macroeconomic relevance. This would also imply a new way of carrying out cross-border payments, which could in turn pave the way for a new system of international payments. The development of an economic account of the nation as a whole and the introduction of a consistent way of recording transactions following a truly double-entry bookkeeping would also erase statistical discrepancies ex ante and reflect the necessary equality (identity) of credits and debits both for all transactions taken together and for each of them separately. The balance of payments is already a powerful economic tool, but only through a money-consistent reform would it display its full potential.

Suggested Citation

  • Edoardo Beretta & Alvaro Cencini, 2020. "Double-entry bookkeeping and balance of payments: the need for developing a new approach," Post-Print hal-03121404, HAL.
    • Handle: RePEc:hal:journl:hal-03121404
    DOI: 10.9770/ird.2020.2.3(1)
    Note: View the original document on HAL open archive server: https://hal.science/hal-03121404
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    References listed on IDEAS

    as
    1. A. P. Thirlwall & Heather D. Gibson, 1992. "A History of the UK Balance of Payments," Palgrave Macmillan Books, in: Balance-of-Payments Theory and the United Kingdom Experience, edition 0, chapter 9, pages 219-271, Palgrave Macmillan.
    2. A. P. Thirlwall & Heather D. Gibson, 1992. "Balance-of-Payments Theory and the United Kingdom Experience," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-21806-6, March.
    3. Claude Gnos & Sergio Rossi (ed.), 2012. "Modern Monetary Macroeconomics," Books, Edward Elgar Publishing, number 12557.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    balance of payments; double-entry bookkeeping; nation's economic account; reserve assets;
    All these keywords.

    JEL classification:

    • B27 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - International Trade and Finance
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • P33 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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