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FINAL
Gabriel Quirós
DG-Statistics
European Central Bank
Fundamentals of the
euro area balance of
payments and
international
investment position
Joint ECB NBRM Seminar on Statistics
Skopje, 3 October 2013
Overview
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• Basic concepts
• Method of compilation of euro area aggregates
• ECB Publication
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Basic concepts
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• Transactions and positions with rest of the world
– Residency concept… euro area
• Methodology based on IMF Balance of payments
Manual (BPM5)… move to BPM6 in June 2014
• Balance of payments
– Transactions (not payments!)
• Concept: cross border, change of ownership
• Time of recording: when the ownership
change
• Value: transaction price
• International investment position
– Outstanding amounts at market prices
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Basic concepts
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• Balance of payments
– Double entry system
• Each transaction is reflected in two entries
(credit and debit)
• Imputed entries
– Sign convention (new in BPM6)
• Net increases of assets / liabilities (+)
• Net decreases of assets / liabilities (-)
– Mismatch owing to different sources: errors and
omissions
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Basic concepts
Main accounts in the balance of payments
• Current account
– Goods
– Services
– Primary Income
– Secondary Income
• Capital account
• Financial account
– Direct investment
– Portfolio investment
– Financial derivatives
– Other investment
– Reserve assets
• Errors and Omissions
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Basic concepts
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Relationship between balance of payments and
international investment position
• Changes in i.i.p. =
B.o.p. financial transactions +
Changes related to exchange rates +
Changes related to asset prices +
Other changes (reclassifications, write-offs, etc.)
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Basic concepts
Relationship between b.o.p. and i.i.p.
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Method of compilation of euro area aggregates
• Euro area as a single economic “entity”
• Residency
– Residents in euro area countries
– ECB and ESM (not other EU institutions)
– Importance (and complexity) of SPEs
• Transactions and positions with rest of the world
(“extra euro area”)
– Criterion for geographical breakdown
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Method of compilation of euro area aggregates
Euro area BOP and IIP aggregation
• In general
– Euro area members compile national BOP and
IIP with a geographical breakdown (intra and
extra euro area)
– Reserve assets by definition are all extra euro
area (claims on non-residents of the euro area)
– Add-up extra transactions and positions
– Country contributions to the aggregate are not
disclosed by the ECB
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Method of compilation of euro area aggregates
• Exception: Liabilities of portfolio investment and
related income
– Difficulties to identify geographical breakdown
of creditors (holders of securities)
– Deduct intra euro area assets from national
liabilities
– Assumes matching of mirror data (no
asymmetries!)
– Collection security-by-security and
classifications with the CSDB
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Method of compilation of euro area aggregates
Basis for an accurate euro area aggregation
Contributions should be:
• Consistent on
– methodologies and definitions
– valuations
– recording time
– instrument and type of investment classification
• Accurate geographical breakdown
• Full coverage of SPEs
– Otherwise, we accumulate errors…….
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Method of compilation of euro area aggregates
• Euro area net errors & omissions (n.e.o)
= National net errors & omissions + euro area
asymmetries
Chart: Cumulative n.e.o. in the b.o.p. of the euro area, US, UK and Japan
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Method of compilation of euro area aggregates
• From 2007, WG-ES has worked intensively to
improve the internal consistency of euro area
b.o.p.
• Adjustments at euro area level (macro
corrections)
– Correcting for geographical allocation of loans by nonMFIs
– Grossing-up for euro area investment funds shares held
by euro area households
– Use of BIS data for deposits and loans vis-à-vis foreign
banks
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Method of compilation of euro area aggregates
• Changes to national data collection and
compilation methods
–
–
–
–
–
Transit trade treatment (services vis-à-vis non-residents)
Debtor/creditor principle
S-B-S compilation
Coverage of SPEs
Improve coverage in financial derivatives
• FDI network…
– talk to the other members and share information
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ECB Publication
• Euro area balance of payments
– Monthly (7 weeks after end of period)
• Includes current account seasonally adjusted
• Monetary presentation of the balance of
payments
– Quarterly geographical breakdown (4 months)
•
Euro area International investment position
– Quarterly (4 months after end of period)
– Annual geographical breakdown (11 months)
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ECB publication
Quarterly b.o.p. and annual i.i.p.
From 2003
From 2003
From 2005
Brazil,
Russia,
India, +China
and Hong Kong
•• From
2006:
BRIC countries
Hong Kong
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ECB Publication
• Monthly international reserves assets and foreign
currency liquidity template
– Only for the Eurosystem (Central Government
not covered)
• Euro area external debt
– Quarterly (4 months after end of period)
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Thanks!
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