Official Settlement Account
What it is:
An official settlement account is an account that records transactions of foreign exchange reserves, bank deposits and gold at a central bank.
How it works (Example):
For example, the Federal Reserve uses official settlement accounts to keep track of its transactions in gold, dollars or other assets with other countries' central banks.
Why it Matters:
The official settlement account is a crucial component in the nation's balance of payments. Though the account may keep track of a specific transactions, it also helps record a country's assets with other banks, whether it is running a deficit or surplus in those assets, and the movement of dollars to foreign governments.
