Methodology, sources and use of Balance of Payments Working Group "European Statistical Data Support" Luxembourg, 15th & 16th February 2012 Methodology, sources and use of Balance of Payments

Data availability at Eurostat, Uses of balance of payments data. Definition, Methodology, Data availability at Eurostat, Uses of balance of payments data. 15-16 February 2012 Methodology, sources and use of Balance of Payments

DEFINITION The balance of payments (BoP) is a statistical statement that systematically summarises, over a given period of time, all the transactions of an economy with the rest of the world. It records all economic transactions undertaken between the residents and non-residents of an economy during a given period. It provides information on the total value of credits (or exports) and debits (or imports) for each BoP item and on the net result or “balance” (credits minus debits) of the transactions with each partner. 15-16 February 2012 Methodology, sources and use of Balance of Payments

CURRENT ACCOUNT Describes transactions in real resources, Shows if an economy is net lender or net borrower to the rest of the world, Main items: Goods, Services, Income, Current transfers. 15-16 February 2012 Methodology, sources and use of Balance of Payments

CAPITAL AND FINANCIAL ACCOUNTS Shows how real resource flows are financed (capital transfers or transactions in financial instruments), CAPITAL ACCOUNT records capital transfers and transactions in non-produced, nonfinancial assets, FINANCIAL ACCOUNT records transactions in external financial assets and liabilities: Direct investment, Portfolio investment, Other investment, Financial derivatives, Reserve assets 15-16 February 2012 Methodology, sources and use of Balance of Payments

METHODOLOGY The methodological framework followed in the compilation of the Balance of Payments is defined in the fifth edition of the International Monetary Fund Balance of Payments Manual (BPM5) published in 1993. New manual – BPM6 has been published and will be implemented in the EU in 2014. 15-16 February 2012 Methodology, sources and use of Balance of Payments

SOURCES International Trade Statistics: measure the quantities and values of goods that move into or out of an economy, Extra-EU trade: Extrastat - data are compiled from forms submitted by exporters, importers, or their agents to customs officials, Intra-EU trade: Intrastat - data are collected directly from trade operators, which send a monthly declaration to the relevant national statistical administration. 15-16 February 2012 Methodology, sources and use of Balance of Payments

SOURCES “Settlements system” - International Transaction Reporting System (ITRS): Banks had to report to their National Central Bank, all the information related to cross-border settlements, Decreasing accuracy, as companies are using new techniques in managing their assets, EU Regulation (Regulation (EC) No 2560/2001 on cross-border payments in Europe introduced an exemption threshold for the banks’ reporting on behalf of their customers.   15-16 February 2012 Methodology, sources and use of Balance of Payments

SOURCES Direct reporting systems and new surveys to make up for the loss of information from settlements system: Enterprise surveys on BOP activity from enterprises - collect aggregate enterprise rather than individual transactions data. Collections from persons and households (for example surveys of travelers). Official sources: measure activities of the official sector, by-products of administrative systems. 15-16 February 2012 Methodology, sources and use of Balance of Payments

24/02/2019 LEGAL BASIS IN THE EU Regulation (EC) No 184/2005 of the European Parliament and of the Council of 12 January 2005 on Community statistics concerning balance of payments, international trade in services and foreign direct investment. Implementing Commission regulations: 601/2006 - format and the procedure for the transmission of data, 602/2006, 707/2009 – updates of data requirements. BoP Vademeum – updated annually (not legally binding) 15-16 February 2012 Methodology, sources and use of Balance of Payments

DATA DISSEMINATION IN EUROSTAT EU aggregate data: 25 current account posts for partners Extra EU-27 (V2), Switzerland (CH), Canada (CA), USA (US), Japan (JP), China (CN), Brazil (BR), Hong Kong (HK), Russia (RU), India (IN), Total capital account for partners V2, CH, CA, US, JP, CN, BR, HK, RU, IN, 9 financial account posts for partners V2, CH, CA, US, JP, CN, BR, HK, RU, IN, 10 current account and 7 financial account posts for partner V2. 15-16 February 2012 Methodology, sources and use of Balance of Payments

DATA DISSEMINATION IN EUROSTAT Data for individual EU Member States, Croatia, Iceland, Turkey and Norway, Data available in Euro and National Currency, Annual time series starting from 1966, Quarterly time series starting from 1970Q1. 15-16 February 2012 Methodology, sources and use of Balance of Payments

USES OF BALANCE OF PAYMENTS The Balance of payments provides harmonized information on international transactions which are divided into current, capital and financial accounts. BoP is an important macro-economic indicator used to assess the overall position of an economy (of credit or debit) towards the external world, Current account is the main indicator for net lending/net borrowing of an economy - a high current account deficit indicates that the economy is importing in excess of its exports. 15-16 February 2012 Methodology, sources and use of Balance of Payments

Thank you for your attention ! Olaf NOWAK Eurostat C.2 Olaf.NOWAK@ec.europa.eu +352-4301-38590 15-16 February 2012 Methodology, sources and use of Balance of Payments