Current Account

The current account includes deposits, withdrawals, and contra transactions. Such accounts are also called the Demand Deposit Account. A Current account can be opened in most of the commercial banks. A current account being a zero-account, is generally associated with huge transactions on a regular basis. The current account is one half of the balance of payments, the other half being the capital account. While the capital account measures cross-border investments in financial instruments and changes in central bank reserves, the current account measures imports and exports of goods and services, payments to foreign holders of a country's investments, payments received from investments abroad, and transfers such as foreign aid and remittances. Some countries will split the capital account into two top-level divisions (i.e., the financial account and the capital account). In this context, the financial account measures increases or decreases in international ownership of assets, while the capital account measures financial transactions that do not affect income, production, or savings.