The euro area reported its current and financial accounts for the month of June. Combined they make up the balance of payments. Traditionally, under the gold standard, the current account would be balanced by capital flows and the transfer of gold claims. In the modern era, some economists emphasize the basic balance in explaining (and forecasting) currency fluctuations. The basic balance is the current account plus long-term capital flows. The assumption is that short-term capital flows are noisy, influenced by cyclical factors, while long-term capital flows are thought to be the true signal, reflecting underlying ... (full story)