COMPILATION PROCEDURES:
REST OF THE WORLD
Filipa Lima
Deputy – Head | Statistics Department
Banque d’Algérie
IFC seminar on Developing and Improving Sectoral Financial Accounts
Session 5: The non-resident sector
Algiers, 21 January, 2016
OUTLINE
1. Main definitions
2. Linkages between RoW and BoP/ IIP
3. BoP and IIP Statistics – Regulatory framework
4. BoP and IIP Statistics – Definitions, data sources and compilation
5. Methodology of compilation
6. Internal consistency between different sources
7. Statistics on foreign financial claims of Portuguese banks
Algiers, 21 January, 2015
IFC seminar on Developing and Improving Sectoral Financial Accounts
2
OUTLINE
1. Main definitions
2. Linkages between RoW and BoP/ IIP
3. BoP and IIP Statistics – Regulatory framework
4. BoP and IIP Statistics – Definitions, data sources and compilation
5. Methodology of compilation
6. Internal consistency between different sources
7. Statistics on foreign financial claims of Portuguese banks
Algiers, 21 January, 2015
IFC seminar on Developing and Improving Sectoral Financial Accounts
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1. Main definitions
The rest of the World account (RoW) [in National Accounts]
The rest of the world sector (S.2) is a grouping of units without any
characteristic functions and resources; it consists of non-resident units
insofar as they are engaged in transactions with resident institutional
units, or have other economic links with resident units. Its accounts provide
an overall view of the economic relationships linking the national economy
with the rest of the world (ESA 2010 - §2.131)
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1. Main definitions
Balance of Payments (BoP)
The balance of payments summarizes transactions between residents and
nonresidents during a period. It consists of the goods and services account,
the primary income account, the secondary income account, the capital
account, and the financial account (BPM6 - §2.12)
International Investment Position (IIP)
The IIP is a statistical statement that shows at a point in time the value of:
financial assets of residents of an economy that are claims on nonresidents
or are gold bullion held as reserve assets; and the liabilities of residents of
an economy to nonresidents (BPM6 - §2.8)
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IFC seminar on Developing and Improving Sectoral Financial Accounts
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OUTLINE
1. Main definitions
2. Linkages between RoW and BoP/ IIP
3. BoP and IIP Statistics – Regulatory framework
4. BoP and IIP Statistics – Definitions, data sources and compilation
5. Methodology of compilation
6. Internal consistency between different sources
7. Statistics on foreign financial claims of Portuguese banks
Algiers, 21 January, 2015
IFC seminar on Developing and Improving Sectoral Financial Accounts
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2. Linkages between RoW and BoP/ IIP
The rest of the world account covers transactions between resident and
non-resident institutional (balance of payments) units and the related
stocks of assets and liabilities (international investment position)
BUT
Rest of the world plays a role in the accounting structure similar to that of
an institutional sector from the perspective of non-residents (with the
counterparty in the domestic economy)
The balance of payments / international investment position is from the
perspective of the resident sectors (with the counterparty in the domestic
economy)
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2. Linkages between RoW and BoP/ IIP
A resource for the rest of the world is a use for the resident economy and
vice versa:
In Balance of Payments
BoP surplus is a surplus of the resident economy and a deficit
of the rest of the world (national accounts)
BoP deficit is a deficit of the resident economy and a surplus of
the rest of the world (national accounts)
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2. Linkages between RoW and BoP/ IIP
An asset of the rest of the world is a liability of the resident economy and
vice versa:
In International Investment Position
Positive IIP is a positive financial net worth of the resident
economy and a negative financial net worth of the rest of the
world (national accounts)
Negative IIP is a a negative financial net worth of the resident
economy and a positive financial net worth of the rest of the
world (national accounts)
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2. Linkages between RoW and BoP/ IIP
Accounting principle:
Rest of the world sector uses a quadruple-entry* (each transaction involving
two institutional units is recorded twice by each unit)
Balance of payments / international investment position uses a doubleentry** accounting system (each transaction is recorded as consisting of two
entries and the sum of the credit entries and the sum of the debit entries is
the same)
* the activity of either two residents or a resident and a non-resident is recorded.
** the activity of only one transactor is recorded: the resident entity (with a non-resident entity).
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2. Linkages between RoW and BoP/ IIP
Complete concept and classification concordance between balance of payments /
international investment position and the rest of the world account as bop / iip form
an integral part of the national accounts (although the extent of cross-classifications
may differ between the two systems)
Similarities between the two systems:
Identification of resident producers / consumers
Definition of the economic territory and centre of economic interest
Valuation principles of market prices and accrual accounting
In the rest of the world financial account the instrument of investment is the
primary classification, whereas in the bop/ iip financial account classification is given
by functional category
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IFC seminar on Developing and Improving Sectoral Financial Accounts
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OUTLINE
1. Main definitions
2. Linkages between RoW and BoP/ IIP
3. BoP and IIP Statistics – Regulatory framework
4. BoP and IIP Statistics – Definitions, data sources and compilation
5. Methodology of compilation
6. Internal consistency between different sources
7. Statistics on foreign financial claims of Portuguese banks
Algiers, 21 January, 2015
IFC seminar on Developing and Improving Sectoral Financial Accounts
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3. BoP and IIP Statistics – Regulatory framework
Organic Law of Banco de Portugal (BP) – Law nº 5 / 98, of 31 January, assigns to BP
the responsibility for the compilation and production of balance of payments and
international investment position and the power of require to any public or private
entity the provision of information necessary to comply with that referred in the
previous item
Instruction No. 27/2012 of Banco de Portugal, Statistics on the Foreign transactions
and positions
Instruction No. 31/2005 of Banco de Portugal, on Securities Statistics – Transactions
and positions
Decree-Law No. 295/2003 of 21 November, which regulates the legal regime of
economic and financial transactions with foreign countries and foreign exchange
operations
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3. BoP and IIP Statistics – Regulatory framework
Guideline of the ECB of 31 May 2007 (ECB/2007/3) concerning ECB statistical
requirements in the field of external statistics
Recommendation of the ECB of 31 May 2007 (ECB/2007/4) and Regulation (EC) No
184/2005 of the European Parliament and the Council of 12 January concerning
Community statistics on balance of payments, international trade in services and foreign
direct investment
At the European Union and Monetary Union level, the Eurostat and ECB divided the
responsibility for compilation of BoP and IIP statistics:
Eurostat is responsible for current and capital account (excluding investment income);
collection of information on direct investment with detailed geographical and sectoral
breakdown (economic activity); international trade statistics
European Central Bank is responsible for monthly bop / iip compilation for the Monetary
Union; financial account (including investment income) and quarterly IIP statistics
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IFC seminar on Developing and Improving Sectoral Financial Accounts
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OUTLINE
1. Main definitions
2. Linkages between RoW and BoP/ IIP
3. BoP and IIP Statistics – Regulatory framework
4. BoP and IIP Statistics – Definitions, data sources and compilation
5. Methodology of compilation
6. Internal consistency between different sources
7. Statistics on foreign financial claims of Portuguese banks
Algiers, 21 January, 2015
IFC seminar on Developing and Improving Sectoral Financial Accounts
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4. BoP and IIP Statistics – Definitions, data sources and compilation
BoP / IIP presentation follows functional category approach
Financial
Derivatives
Portfolio
Investment
Other
Investment
Direct
Investment
Reserve assets
BoP / IIP
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4. BoP and IIP Statistics – Definitions, data sources and compilation
Direct Investment
It is a category of cross-border investment associated with a resident in one economy
having control (> 50% of the voting rights) or a significant degree (between 10% and
50% of the voting rights) of influence on the management of an enterprise that is
resident in another economy
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4. BoP and IIP Statistics – Definitions, data sources and compilation
Direct Investment
 Data sources, on a monthly basis:
 COPE – communication of external operations and positions (for transactions in equity,
loans and direct investment income settled)
 SSIS – collected from custodians processed on a security-by security basis (foreign
securities in portfolios held by residents: transactions, outstanding amounts and related
income)

Immigration and borders service – real estate investment
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4. BoP and IIP Statistics – Definitions, data sources and compilation
Direct Investment
 Data sources, on a monthly basis:
 COPE – communication of external operations and positions (for transactions in equity,
loans and direct investment income settled)
 SSIS – collected from custodians processed on a security-by security basis (foreign
securities in portfolios held by residents: transactions, outstanding amounts and related
income)

Immigration and borders service – real estate investment
 Data sources, on an annual basis:
 IES – Simplified Corporate Information (for equity, reinvested earnings and structure of
the economic group)
 On an monthly basis, estimates are produced for equity and reinvested earnings
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4. BoP and IIP Statistics – Definitions, data sources and compilation
Portfolio Investment
Portfolio investment is defined as crossborder transactions and positions involving
debt or equity securities, other than those included in direct investment or reserve
assets and should be negotiable, giving the investor the ability to quickly compose its
portfolio
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4. BoP and IIP Statistics – Definitions, data sources and compilation
Portfolio Investment
Data sources
SSIS - collected from custodians processed on a security-by security basis (foreign
securities in portfolios held by residents: transactions, outstanding amounts and related
income)
COPE - communication of external operations and positions (for portfolios held by
residents and located in custodians abroad)
Market and Reserve Management Department for additional details of securities
Residual approach - liabilities are calculated as the difference between the total
amounts outstanding of all securities issued by residents and the holdings of such
securities by residents
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4. BoP and IIP Statistics – Definitions, data sources and compilation
Financial Derivatives and Employee Stock Options
Negotiable financial instrument linked to, although autonomous, another financial
instrument, indicator or commodity that presents financial risk
Data sources
Financial derivatives surveys (provided on a monthly basis)
COPE - communication of external operations and positions (for financial derivatives
contracted with banks abroad)
Direct report of the Portuguese Treasury and Debt Management Agency (IGCP, E.P.E.) on
positions in financial derivatives
Market and Reserve Management Department for additional details of securities
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4. BoP and IIP Statistics – Definitions, data sources and compilation
Other Investment
 Residual category, including transactions that do not fit into the other
functional categories
 Positions are valued at nominal value (pragmatic concerns about data
availability and the need to maintain symmetry between debtors and
creditors)
 This value includes accrued income that has not yet been paid.
Nevertheless, transactions should be valued at market prices
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4. BoP and IIP Statistics – Definitions, data sources and compilation
Other Investment
Data sources
COPE – loans / deposits stocks and flows, income
Central Bank – Accounting Plan of Banco de Portugal (Accounting Department); Market and
Reserve Management Department, for additional details of Deposits, with a country and currency
breakdown
MFIs – balance sheet reported for monetary and financial statistics (MFS), with a country and
currency breakdown
Households – COPE, COL, mirror MFS (other EMU countries) and mirror BIS
Other sectors – COPE, ITENF / IES (trade credits)
Other auxiliary information for General Governemnt - Direct report of the Portuguese Treasury
and Debt Management Agency (IGCP, E.P.E.)
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4. BoP and IIP Statistics – Definitions, data sources and compilation
Reserve assets
 Valuation: market prices for all tradable instruments; nominal value (for positions)
in non-tradable instruments.
 Data source: The Information system of the Banco de Portugal (accounting,
payment and market operations systems) provides a comprehensive set of
information for the compilation of Reserve Assets: positions, flows and related
income.
country
in/in
in/out
out/in
out/out
In – inside euro area
Out – outside euro area
currency
Algiers, 21 January, 2015
Reserve assets
IFC seminar on Developing and Improving Sectoral Financial Accounts
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OUTLINE
1. Main definitions
2. Linkages between RoW and BoP/ IIP
3. BoP and IIP Statistics – Regulatory framework
4. BoP and IIP Statistics – Definitions, data sources and compilation
5. Methodology of compilation
6. Internal consistency between different sources
7. Statistics on foreign financial claims of Portuguese banks
Algiers, 21 January, 2015
IFC seminar on Developing and Improving Sectoral Financial Accounts
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5. Methodology of compilation
Balance of Payments / International Investment position information is reorganized
for rest of the world account compilation purposes:
 Value type used for the rest of the world compilation:
 Stocks – IIP
 Transactions – BoP
 Other price changes – IIP
 Other volume changes – determined by difference (residual approach) but also
available in IIP
Information by sector of resident counterpart – information source for other sectors
Aggregation of the counterparty country between Monetary Union and NonMonetary Union countries
Reorganization of functional categories and instruments
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5. Methodology of compilation
Functional categories vs financial instruments
Financial Instruments
BoP/IIP
Direct Investment
F.1.
Monetary gold and SDR
Portfolio Investment
F.2.
Currency and deposits
Financial Derivatives
F.3.
Securities other than shares
Other Investment
F.4.
Loans
Reserve Assets
F.5.
Shares and other equity
F.6.
Insurance technical reserves
F.7.
Financial derivatives
F.8.
Other accounts receivable/payable
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5. Methodology of compilation
CONNECTION
BOP / IIP
Direct Investment
Equity capital
Reinvested earnings
Other capital
F.5
F.5
F.4
Portfolio Investment
Shares and other equity
Debt securities
Financial Derivatives
F.5
F.3
F.7
Other Investment
Currency and deposits
Loans
Trade credits
Other assets
F.2
F.4
F.81
F.5 / F.6 / F.89
Reserve Assets
Monetary gold
Special drawing rights (SDR)
Reserve position in the IMF
Foreign exchange
Currency and deposits
Debt securities
Financial derivatives
Other assets
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F.1
F.1
F.2
Financial Accounts
F.1
Monetary gold and SDR
F.2
Currency and deposits
F.4
Securities other than shares
and financial derivatives
Loans
F.5
Shares and other equity
F.6
F.7
Insurance technical reserves
Financial derivatives
F.81
Trade credits and advances
F.89
Other accounts except trade
credits and advances
F.3
F.2
F.3
F.7
F.89
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5. Methodology of compilation
Revision policy ensures similar revision time spans and are based on the same vintages of the
source data
However there are some methodological differences between the national financial account and
Balance of payments / international investment position that are incorporated:
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5. Methodology of compilation
Revision policy ensures similar revision time spans and are based on the same vintages of the
source data
However there are some methodological differences between the national financial account and
Balance of payments / international investment position that are incorporated:
International Investment Position
 Asset of the Central Bank
MONETARY GOLD
Financial Accounts
 Asset of the Central Bank
 Liability of the RoW
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5. Methodology of compilation
Revision policy ensures similar revision time spans and are based on the same vintages of the
source data
However there are some methodological differences between the national financial account and
Balance of payments / international investment position that are incorporated:
International Investment Position
 Asset of the Central Bank
MONETARY GOLD
Financial Accounts
 Asset of the Central Bank
 Liability of the RoW
ROW FINANCIAL SAVING
– (FINANCIAL ACCOUNT BALANCE + ERRORS AND OMISSIONS)
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IFC seminar on Developing and Improving Sectoral Financial Accounts
BoP
32
5. Methodology of compilation
Revision policy ensures similar revision time spans and are based on the same vintages of the
source data
However there are some methodological differences between the national financial account and
Balance of payments / international investment position that are incorporated:
International Investment Position
 Asset of the Central Bank
MONETARY GOLD
Financial Accounts
 Asset of the Central Bank
 Liability of the RoW
ROW FINANCIAL SAVING
– (FINANCIAL ACCOUNT BALANCE + ERRORS AND OMISSIONS)
BoP
ROW NET FINANCIAL ASSETS
– ( INTERNATIONAL INVESTMENT POSITION – MONETARY GOLD POSITION)
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IFC seminar on Developing and Improving Sectoral Financial Accounts
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OUTLINE
1. Main definitions
2. Linkages between RoW and BoP/ IIP
3. BoP and IIP Statistics – Regulatory framework
4. BoP and IIP Statistics – Definitions, data sources and compilation
5. Methodology of compilation
6. Internal consistency between different sources
7. Statistics on foreign financial claims of Portuguese banks
Algiers, 21 January, 2015
IFC seminar on Developing and Improving Sectoral Financial Accounts
34
6. Internal consistency between different sources
Internal analysis developed on a monthly basis to ensure consistency between rest of the world
sector and other sectors´ financial instruments:
Whom to whom analysis:
Debt securities (long term and short term) and Equity instruments
Assets and liablities
BoP / IIP and SSIS data comparison
in order to fill a whom-to-whom matrix
Ativos
Assets
Liabilities
Passivos
S.11
S.12
S.13
S.14+S.15
S.2
S.11
BoP / IIP
assets
vis-a-vis
other
sectors
S.12
S.13
S.14+S.15
S.2
Total
BoP / IIP liabilities vis-a-vis other sectors
Total
Integration and use of internal data sources: MFS statistics, SSIS, …
Other quality checks to compare the information available in other statistics
Algiers, 21 January, 2015
IFC seminar on Developing and Improving Sectoral Financial Accounts
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OUTLINE
1. Main definitions
2. Linkages between RoW and BoP/ IIP
3. BoP and IIP Statistics – Regulatory framework
4. BoP and IIP Statistics – Definitions, data sources and compilation
5. Methodology of compilation
6. Internal consistency between different sources
7. Statistics on foreign financial claims of Portuguese banks
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IFC seminar on Developing and Improving Sectoral Financial Accounts
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7. Statistics on foreign financial claims of Portuguese banks
Compiled according to the BIS methodological guidelines in the field of international banking
statistics, which comprises:
Locational banking statistics - financial claims and liabilities in the unconsolidated
balance sheet of resident banks in Portugal, and are currently published by Banco de
Portugal as part of the balance sheet of other monetary financial institutions under
monetary and financial statistics
Consolidated banking statistics - exposure to risks of banks having their head office in
Portugal, particularly to country-risk associated with financial claims (except financial
derivatives) held by them in the context of their international activity, including foreign
claims of branches and subsidiaries abroad
Foreign financial claims of Portuguese banks on a consolidated basis were published in
November 2015
These statistics are also used to compile households deposits abroad using the mirror
information provided by the BIS
Data source – based on direct report from MFI
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7. Statistics on foreign financial claims of Portuguese banks
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7. Statistics on foreign financial claims of Portuguese banks
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Thank you for your attention!
Questions?
Filipa Lima
slima@bportugal.pt
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