Reconciliation of quarterly non-financial and financial accounts Carina K. Friis Danmarks Nationalbank DANMARKS NATIONALBANK

Production of quarterly sector accounts Danmarks Nationalbank: Quarterly financial sector accounts Stocks from 1998, transactions and flows from 2003 Published first time in 2004 (transactions in 2006) Danmarks Statistik: Quarterly non-financial sector accounts Data from 1990 and onwards Published first time in 2008 Planning to publish integrated accounts in January 2010 Period: 2003 and onwards. DANMARKS NATIONALBANK

DANMARKS NATIONALBANK Why integration? User considerations: A consistent framework will make financial accounts more usable. Integrated national accounts contribute to the analysis of interactions between the financial and real economy and thereby contribute to appropriate economic and monetary policy. Contribution to over-all quality of national accounts Keeping transparency is an issue DANMARKS NATIONALBANK

The process of integration Short-term: The non-financial accounts are taken as given. Medium-term: Identify further elements which can improve our reconciliation Exchange of financial-flow data as a input to the non-financial accounts (dividends and interest on bonds and deposits from MFI- and SEC-statistics). Long-term: Continued and intensified co-operation between NSI and NCB. Further development of sources. DANMARKS NATIONALBANK

Accumulated statistical discrepancies DANMARKS NATIONALBANK

Selected reconciliation elements to be introduced in the short run S. 2: Close to proportional distribution of statistical discrepancies S.122: Differences in deposits assets/liabilities for MFI vs. MFI S.14/S.11: Better estimation of unquoted shares (balances and transactions) All sectors/Use of AF.7: Only if we can make an argument for a timing difference between the transaction and the corresponding payment. DANMARKS NATIONALBANK

DANMARKS NATIONALBANK Reconciliation of S.2 No clear bias In close corporation with the IIP-section (also placed in NCB) We have chosen to distribute E&O by a IIP key. Continued work on minimizing E&O related to coverage, improved quality of sources etc. DANMARKS NATIONALBANK

DANMARKS NATIONALBANK Reconciliation of S.122 DANMARKS NATIONALBANK

DANMARKS NATIONALBANK S.14 (S.11 residual) – The only sector with a clear bias in statistical discrepancy… The coverage of unquoted shares issued by S.11 and held by S.11 and S.14 is limited. Transactions of unquoted shares between S.11 and S.14 is NOT neutral to net lending/net borrowing. Assumption: A continued sale of unquoted shares from S.14 to S.11 Among others due to generational changes. DANMARKS NATIONALBANK

Estimation of unquoted shares Final distribution among holders (marked-value) Unquoted shares issued by non-financial corporations (book-value) Business account database At identification-number level Book-value Distribution among holders (book-value) Distribution based on BvD-data Households (S.14+S.15) Non-financial corporations (S.11) Residual to be divided between S.11 and S.14+S.15 Financial corporations (S.12) P/B Financial corporations (S.12) Rest of the world (S.2) (Identification-number level) General Government (S.13) General Government (S.13) DANMARKS NATIONALBANK DANMARKS NATIONALBANK 10

A continued sale of unquoted shares from S.14 to S.11?? Preliminary results from ”Estimation of unquoted shares”: Quarterly financial accounts currently underestimates unquoted shares issued by S.11. (preliminary estimates suggest that the amount of unquoted shares is around four times as big as quoted shares) Both S.14 and S.11 possess considerable amounts of unquoted shares issued by S.11 (distribution around 30/70). Preliminary estimation’s based on the tax base and SEC-data concerning income from stocks. A considerable part (more than 50 pct.) of the tax base concerns income from unquoted shares. A considerable part of the tax base concerns sale of unquoted shares. DANMARKS NATIONALBANK

A continued sale of unquoted shares from S.14 to S.11?? Existing analysis concerning generational changes. In the period 1995-2003 on average 13,4 per cent of generational changes resulted in sales to S.11. Sales to S.11 was in particular shares issued by S.11 The likelihood of a sale to S.11 is increasing in size of total balance on the corporation in question. Conclusion: Transactions in unquoted shares is a major source of statistical discrepancies between quarterly Danish financial and non-financial accounts of the household and non-financial sectors. DANMARKS NATIONALBANK

DANMARKS NATIONALBANK Way Forward 8’th of January: Publication of a first set of reconciled data 2003-2009Q3 Identification of further elements to enhance the quality of the quarterly sector accounts and thereby minimizing the need for reconciliation DANMARKS NATIONALBANK