Balance of Payments (current Account) Q

Hi guys, my text book says that the current account has to balance, i.e. inflows = outflows. I don't see the reasoning why this has to happen.
Thanks =)

Not the current account.

The balance of payment is made up of 3 different accounts.
Current account - deals with transfer of good and services and income and current transfers.
Capital account and financial account - this account is associated with the flow of money.

For the balance of payment to balance of course X must equal to M

Remember that there is no such thing as balance of payment deficit because it must balance over time.

However the BOP can still balance if M>X if the country is using borrowed foreign money to develop its economy.
Or when X>M and the country is investing the money abroad in order to increased M in the future.

My teacher said that in the long run, the current account needs to balance so that trade between countries is possible as if a country is in a current account deficit, it would probably reduce imports, not benefiting any current due the current account not balancing, for example.