An analysis of recent financial events
through the lens of the Canadian
System of National Accounts −
Financial and Wealth Accounts
Allan Tomas, Chief, Financial and Wealth Accounts
November 3, 2009
Persons and unincorporated business
Corporations and governm ent business
billions of dollars
percent of GDP
60
40
Surplus
20
0
-20
Deficit
-40
-60
-80
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006
Persons and unincorporated businesses
14
12
10
8
6
4
2
0
-2
-4
-6
-8
-10
-12
-14
-16
-18
40
Surplus
0
Deficit
-40
-60
-80
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006
2
40
Surplus
20
0
-20
Deficit
-40
1961 1966 1971 1976
1981 1986 1991
Corporations and government business
percent of GDP
60
Government
12
10
8
6
4
2
0
-2
-4
-6
-8
1996 2001 2006
Percent of GDP
Non-residents
billions of dollars
-20
percent of GDP
60
Percent of GDP
Governm ent
20
billions of dollars
Percent of GDP
14
12
10
8
6
4
2
0
-2
-4
-6
-8
-10
-12
-14
-16
-18
billions of dollars
percent of GDP
40
20
Surplus
0
-20
Deficit
-40
-60
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006
Non-residents
Statistics Canada • Statistique Canada
8
6
4
2
0
-2
-4
-6
-8
-10
-12
Percent of GDP
2016-07-27
The setting
Fundamental shifts in saving behaviour and net lending positions
among sectors in the Canadian economy
The setting
Shift in total debt from governments and corporations to the
household sector
debt / GDP (%)
100
90
80
70
60
50
40
30
20
10
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
3
Persons and unincorporated businesses sector (PUIB)
Federal government sector
Other government sector
Non-financial private corporations sector
Statistics Canada • Statistique Canada
2016-07-27
The setting
Economy increasingly wealth-driven, with growth in the value of
assets, specifically in the household sector
billions of dollars
2,000
1,500
1,000
500
0
1990q1-1998q3
1998q4-2002q3
2002q4-2009q2
Cumulative change in PUIB net worth (excluding savings)
Cumulative PUIB net savings
4
Statistics Canada • Statistique Canada
2016-07-27
The setting
Securitization market for mortgages on the rise in Canada
Securitized mortgages as a % of total
mortgages
60%
55%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Canada
5
United States
Statistics Canada • Statistique Canada
2016-07-27
The setting
Mortgage market more conservative in Canada
Personal sector mortgage debt as a % of
nominal GDP
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Canada
6
United States
Statistics Canada • Statistique Canada
2016-07-27
debt to disposable income ratio (%)
debt service ratio (%)
12
160
140
10
120
8
100
6
80
60
4
40
2
20
0
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
DSR
7
Debt to personal disposable income
Statistics Canada • Statistique Canada
2016-07-27
Risk factors
Household sector exposed to increasing interest rates given
current debt levels
Risk factors
Household sector portfolio takes on more risk
ratio
45%
40%
35%
30%
25%
20%
15%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Deposits and fixed income assets of PUIB
Pension and segregated fund assets of PUIB
Equity and foreign investment assets of PUIB
8
Statistics Canada • Statistique Canada
2016-07-27
Risk factors
Increased international integration of financial markets Canadians' exposure increased - Foreign Property Rule
billions of dollars
FPR
20%
12% - 18%
25% - 30%
No restriction
90
75
60
45
30
15
0
-15
-30
1990
1992
Debt securities
1994
1996
1998
2000
2002
2004
2006
2008
Stocks
Note: Reverse of Balance of Payments signs.
9
Statistics Canada • Statistique Canada
2016-07-27
billions of dollars
6
4
2
0
-2
-4
-6
-8
-10
-12
I
II
III
IV
I
II
2005
Government
III
2006
Corporate financial
IV
I
II
III
IV
2007
I
II
III
2008
IV
I
II
2009
Corporate non-financial
Note: Reverse of Balance of Payments signs.
10
Statistics Canada • Statistique Canada
2016-07-27
Recent financial events
IMPACT: Canadian institutional investors reduce foreign short-term
debt in rapid response to global credit concerns (August 2007);
foreign bonds follow suit in subsequent quarters
billions of dollars
30
25
20
15
10
5
0
-5
-10
-15
-20
-25
II
III
IV
2005
Debt securities
I
II
III
2006
IV
I
II
III
IV
2007
I
II
III
2008
IV
I
II
2009
Stocks
Note: Reverse of Balance of Payments signs.
11
Statistics Canada • Statistique Canada
2016-07-27
Recent financial events
IMPACT: Immediate, marked and sustained change in Canadian
institutional investors’ foreign portfolio investment at the outset of
credit concerns
billions of dollars
10
8
6
4
2
0
-2
-4
-6
-8
-10
-12
I
II
III
IV
I
2006
II
III
IV
I
2007
II
III
2008
IV
I
II
2009
Total liabilities, repurchase agreements
12
Statistics Canada • Statistique Canada
2016-07-27
Recent financial events
IMPACT: The cross-border repurchase agreements market also grinds
to a halt in 2007
Recent financial events
IMPACT: In Canada, the asset-backed securities short-term paper
market shuts down beginning mid-2007
billions of dollars
8
6
4
2
0
-2
-4
-6
-8
-10
IV
2004
I
II
III
2005
IV
I
II
2006
III
IV
I
II
III
IV
2007
I
II
III
2008
IV
I
II
2009
Other short-term paper liabilities, Issuers of asset-backed securities (flows)
13
Statistics Canada • Statistique Canada
2016-07-27
Reaction
The policy reaction: liquidity injection
Fed GOV’T
Financial Inst
+56
Tbills
-50 mortg
+22
deposits,
+32 repos
+24
claims
+26 bonds
+46
T-bills
Bank of Canada
+32 repos
-10 T-bills
+22
deposits
ABS
CMHC
+50 mortg
+24 bonds
+50 bonds
14
Statistics Canada • Statistique Canada
+24 claims
2016-07-27
Reaction
Reaction: T-Bills are mostly purchased by chartered banks
billions of dollars
30
Chartered banks
25
Non-residents
20
Trusteed pension plans
Mutual funds
15
Bank of Canada
10
5
0
-5
-10
-15
2008Q4
15
Statistics Canada • Statistique Canada
2016-07-27
Reaction
Reaction: Substantial new short-term borrowing by the federal
government in 08q4; initially, no change in government net debt
billions of dollars
520
500
480
460
440
420
400
380
360
340
320
300
280
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Federal government - Credit market debt outstanding
16
Statistics Canada • Statistique Canada
2016-07-27
Reaction
Reaction: Credit crunch in Canada?...evidence for non-financial
corporations…supply or demand?
billions of dollars (flows)
16
14
12
10
8
6
4
2
0
-2
-4
-6
-8
I
II
III
IV
I
2007
Bank loans
17
II
III
2008
Other canadian bonds
IV
I
II
2009
Shares
Statistics Canada • Statistique Canada
2016-07-27
Results
Canadian economy slows from 2007 and then contracts
quarterly % change, chained (2002) dollars
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
II
III
2005
IV
I
II
III
IV
2006
Gross domestic product at market prices
18
I
II
III
IV
I
2007
II
III
2008
IV
I
II
2009
Final domestic demand
Statistics Canada • Statistique Canada
2016-07-27
billions of dollars
80
60
40
20
0
-20
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Note: Reverse of Balance of Payments signs.
19
Statistics Canada • Statistique Canada
2016-07-27
Results
Canadian investors repatriated funds from international markets for
the first time in 30 years
S&P TSX Composite index
S&P 500 US index
16,000
1,800
14,000
1,600
1,400
12,000
1,200
10,000
1,000
8,000
800
6,000
600
4,000
400
2,000
200
0
0
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
S&P TSX Composite index
S&P 500 US index
20
Statistics Canada • Statistique Canada
2016-07-27
Results
Canada and US stock markets slide
Results
Household sector capital losses: Canada and United States
Household sector assets % change
8
6
4
2
0
-2
-4
-6
-8
-10
I
II
III
IV
I
II
2005
Canada
21
III
2006
IV
I
II
III
2007
IV
I
II
III
2008
IV
I
II
2009
United States
Statistics Canada • Statistique Canada
2016-07-27
Point of Access – www.statcan.gc.ca
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The Daily
CANSIM
National Economic
Accounts Module on:
www.statcan.gc.ca
NBSA, FFA and BOP
workshops
Consultation with Statistics
Canada analysts
iead-infodcrd@statcan.gc.ca
infobalance@statcan.gc.ca
Ad-hoc analysis and data
requests
Canadian Economic
Accounts Quarterly Review
(CEAQR)
22
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2016-07-27
Release Dates – Financial Flow Accounts
Financial flow accounts 13-014-x and 13-010-x
Release date
Reference period
01-Dec-09
First quarter 2009 – Third quarter 2009
02-Mar-10
First quarter 2009 – Fourth quarter 2009
01-Jun-10
First quarter 2006 – First quarter 2010
01-Sep-10
First quarter 2010 – Second quarter 2010
01-Dec-10
First quarter 2010 – Third quarter 2010
02-Mar-11
First quarter 2010 – Fourth quarter 2010
Financial Flow data are available approximately 60 days after the reference
period.
23
Statistics Canada • Statistique Canada
2016-07-27
2009 Release Dates – National Balance
Sheet Accounts
National balance sheet accounts 13-214-x and 13-010-x
Release date
Reference period
14-Dec-09
First quarter 2009 – Third quarter 2009
15-Mar-10
First quarter 2009 – Fourth quarter 2009
21-Jun-10
First quarter 2006 – First quarter 2010
13-Sep-10
First quarter 2010 – Second quarter 2010
13-Dec-10
First quarter 2010 – Third quarter 2010
14-Mar-11
First quarter 2010 – Fourth quarter 2010
National Balance Sheet Account data are available approximately 75 days after
the reference period.
24
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2016-07-27