Financial reserve assets are excluded from the capital account because changes in reserves reflect government policy rather than market forces.

Question

Quizplus · Accepted Answer

Financial reserve assets such as foreign exchange reserves, IMF reserves, and gold reserves are excluded from the capital account because they reflect government policy decisions rather than market forces. These reserves are typically held to ensure financial stability or to support the domestic currency, and are not influenced by private sector transactions.

Financial Reserve Assets Are Excluded from the Capital Account Because