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Dissemination Standards Bulletin Board Special Data Dissemination Standard (THE SUMMARY METHODOLOGY STATEMENT HAS BEEN PROVIDED BY EURO AREA, WHICH IS SOLELY RESPONSIBLE FOR ITS ACCURACY AND COMPLETENESS. AT THE TIME OF POSTING, THE STATEMENT WAS REVIEWED BY THE IMF FOR CONSISTENCY WITH THE METADATA BASE PAGE DESCRIBING DISSEMINATION PRACTICES. SUBSCRIBERS ARE REQUIRED TO PROVIDE UPDATES TO THE STATEMENT, AS NEEDED, AND ARE EXPECTED TO MAKE OTHER IMPROVEMENTS, AS WARRANTED, TO ENHANCE TRANSPARENCY) Euro Area Summary Methodology Balance of payments Last Posted: Mar-13-2009 Last Updated: Mar-5-2009 Contact Person(s)          Printer Friendly Page   Lasse Nordquist, Head of Section, Balance of Payments, External Statistics Division, European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany   Phone : 49 69 1344 7624   Fax : 49 69 1344 7056   Email : BOP_IIP.STATISTICS@ecb.europa.eu

I. Analytical Framework, Concepts, Definitions, and Classifications

2.1.1 Concepts and definitions Analytical Framework: The concepts and definitions used in euro area balance of payments (b.o.p.) statistics are generally in line with the IMF Balance of Payments Manual (fifth edition, 1993), the ECB Guideline of July 16, 2004 on the statistical reporting requirements of the ECB (ECB/2004/15) and the amending ECB Guideline of May 31, 2007 (ECB/2007/3). The ECB is responsible for the definition of concepts and harmonisation of methodology for the euro area b.o.p. aggregates and for its compilation. The ECB publishes b.o.p. statistics at two different frequencies: monthly and quarterly . The scope, the underlying concepts and the breakdown are different for the monthly b.o.p. and for the quarterly data. Annual data are shown as the aggregation of the quarterly data reported by the Member States for the corresponding year. Monthly and quarterly data referring to the euro area's external transactions are shown in the ECB Monthly Bulletin since May 1999 (for the former) and September 1999 (for the latter). Regarding the transmission of data by the euro area Member States, the ECB requires the following deadlines: - monthly data: by the 30th working day following the end of the month to which the data relate; - quarterly data: within three months of the end of the quarter to which the data relate;. Definition: The b.o.p. is a statistical statement that systematically summarises, for a specific period, the economic transactions of an economy with the rest of the world. Cross-border transactions of the euro area are transactions between residents of participating Member States, seen as one economic territory, and residents of EU Member States not participating in the euro area or residents of third countries. Following the BPM5 recommendation, four institutional sectors are identified separately: monetary authorities, general government, monetary financial institutions (MFI's), and other sectors. A methodological note to the ECB's Monthly Bulletin on Euro area Statistics (February 2008) gives detailed information to the tables of Chapter 7 - External Transactions and positions. 2.3.1 Classification/sectorization Classification: The requirements for the monthly b.o.p. statistics are confined to broad categories of transactions, showing the main items affecting monetary conditions and exchange markets. In the case of the monthly b.o.p., it is permitted, to some extent, to depart from the international guidelines set out in the 5th edition of the IMF Balance of Payments Manual. Fore example, the recording of income on a cash basis, instead of on an accruals basis, and the provision of estimates, owing to the short deadline (six-weeks after the reporting period) set for the participating Member States of the euro area to compile data. The objective of the quarterly balance of payments of the euro area is to provide more detailed information for the analysis of external transactions. The breakdown published by the ECB conforms to the greatest extent possible to the standards set out in the BPM5. For the financial account, the requirements of the standard components of the BPM5 are followed, except that the other investment account is somewhat simplified. As a peculiarity of the euro area b.o.p., the "other investment" account includes temporary net positions of the Eurosystem with the NCBs of Member States not participating in the euro area related to the operation of the TARGET system. These intra-ESCB balances/accounts, which are denominated in euro, are similar to movements of the MFIs' nostro/vostro accounts and, thus, treated on a net basis under liabilities. Institutional sectors: Transactions in the euro area direct and "other" investment accounts are classified by sector according to the institutional sector to which the euro area resident undertaking the transaction belongs. Transactions/positions on the assets side of the euro area portfolio investment account, i.e. transactions/positions relating to securities issued by non-residents, are broken down by sector according to the institutional sector of the euro area holder. Transactions/positions on the liabilities side of the euro area portfolio investment account, i.e. transactions/positions relating to securities issued by residents, are broken down by sector according to the institutional sector of the euro area issuer. Geographical breakdown: since January 2005, the ECB has published a geographical breakdown of the euro area balance of payments and international investment position. The b.o.p. and the i.i.p are disaggregated by individual countries vis-à-vis Denmark, Sweden, the United Kingdom, Canada, Japan, Switzerland and the United States, and counterpart groupings (namely “other EU Member States”, offshore financial centres (a list is maintained by the European Commission (Eurostat) and OECD), EU institutions and international organisations). An ECB press release accompanied the first release, dated January 27, 2005. An article of the ECB Monthly Bulletin presents methodology and first results of the geographical breakdown in the February 2005 issue. As of 2007, the geographical details were expanded to include Brazil, Russia, India, China Mainland and Hong Kong. The geographical breakdown of the portfolio investment income debits is based on the amounts outstanding of the portfolio investment liabilities of the euro area broken down by counterparty. These liabilities are estimated from the claims reported by euro area counterparty countries in the Coordinated Portfolio Investment Survey (CPIS) conducted by the IMF. The breakdown of financial transactions and related investment income follow the debtor/creditor principle, i.e. the euro area’s financial claims are allocated to the debtor’s country of residence, while the euro area’s liabilities are allocated to the country of the investor. In the case of direct investment, the geographical breakdown refers to the country of the foreign affiliate (outward investment) or of the non-resident investor company (inward investment).

II. Scope of the data

2.2.1 Scope Scope of the data Geographical area: In the case of the euro area, the economic territory corresponds (i) to the economic territory of the Member States which have adopted the single currency in accordance with the Treaty (Belgium, Cyprus (as from January 1st 2008), European Central Bank, Germany, Greece (as from January 1st, 2001), Malta (as from january 1st 2008), Spain, Éire/Ireland, France, Italy, Luxembourg, the Netherlands, Austria, Portugal, Slovakia (as from January 1st 2009), Slovenia (as from January 1st, 2007), and Finland) and (ii) the ECB which is regarded as a resident unit of the euro area. All EU institutions except the ECB are treated as not resident within the euro area, implying that all transactions of participating Member States vis-à-vis EU institutions other than the ECB are recorded and classified as extra-euro area transactions in the euro area b.o.p. statistics.

III. Accounting Conventions

2.4.1 Valuation Valuation methods: In principle, market prices are used as the basis of valuation for b.o.p. transactions. Thus flows are generally valued at the actual prices agreed upon by transactors. 2.4.2 Recording basis Time of recording: In line with the BPM5, the ECB principally requires recording on a transactions basis ("accruals principle"), meaning that transactions have to be recorded when economic value is created, transformed, exchanged, transferred or extinguished. Claims and liabilities arise when there is a change in ownership. The change may be legal or economic. In practice, when a change in ownership is not obvious, the change may be assessed by the time that parties to a transaction record it in their books or accounts. However, for the reporting of the monthly b.o.p., recording on a full accruals or transactions basis is not mandatory, owing to the short deadline and the highly aggregated nature for the provision of monthly data. In agreement with the ECB, NCBs and other national compilers may provide data on the current and financial account based on full/partial accruals or on settlements (i.e. cash) in the monthly b.o.p statistics.

IV. Nature of the Basic Data Sources

3.1.1 Source data collection programs The euro area b.o.p. is compiled from the data provided by the Member States of the euro area (see "compilation methods" below). Further information on the nature of these basic data, such as the compilation systems and the methodological particularities in individual Member States, can be found on their SDDS country page in the summary methodology. Furthermore a methodological note on euro area b.o.p. and i.i.p. statistics as well as the publication "European Union balance of payments/international investment position statistical methods" are available on the ECB's website (http://www.ecb.europa.eu).

V. Compilation Practices

3.3.2 Other statistical procedures Compilation methods: From 1997 onwards, each broad category of transaction is broken down into credits and debits for the current and capital accounts and into assets and liabilities for direct investment and, from 1998 onwards, also for portfolio investment and other investment. The ECB compiles the figures for the euro area by aggregating the euro area Member States' transactions vis-à-vis non-residents of the euro area for the current and capital account and for the financial account, except the portfolio investment account and related income and the financial derivatives account. The compilation methods for portfolio investment and related income and financial derivatives are based on a different approach, owing to the difficulties in identifying the holders of securities issued by domestic residents. For the euro area portfolio investment account, the aim is to record the net acquisitions by euro area residents of securities issued by non-residents of the euro area ("assets"), and the net acquisitions by non-residents of the euro area of securities issued by euro area residents ("liabilities"). The assets side can be measured directly, with a quarterly sectoral breakdown of the euro area residents undertaking the transactions. The liabilities side cannot be measured directly, because reporting agents in the euro area often cannot identify the holder of securities which they have issued. Instead, the liabilities side is estimated as net issuances of securities by euro area residents minus the net recorded net acquisitions of such securities by residents of the euro area. The same approach is used to compile the related euro area income item for portfolio investment. While euro area residents' income received on securities issued by non-euro area residents ("extra" credits) can be correctly identified, it may not be possible to compile the corresponding payments to non-euro area residents ("extra" debits) as a direct result of the difficulties in identifying the residency of the holder of securities. Therefore, the amount of the euro area payments to non-euro area residents is calculated by subtracting the amount of receipts of euro area residents from residents of other euro area countries ("intra-credits") from the total amount of payments made by euro area residents to recipients outside their home country (to residents of other to euro area countries and to non-residents of the euro area). The other investment liabilities of the Eurosystem “loans/currency and deposits” (see ECB Monthly Bulletin, Table 7.3.6, column 3) incorporates an adjustment for the holdings of euro banknotes by non-euro area residents. Initially, the adjustment was mostly intended to take into account the effect of the euro cash changeover on b.o.p. transactions in 2002 and was based on euro banknote shipments from/to euro area MFIs. Since 2003, holdings of euro banknotes by non-residents have been estimated using a variety of indirect methods. The net figures for euro area transactions in financial derivatives are compiled by aggregating the national net transactions of the participating Member States. A sectoral breakdown of this account at the euro area level cannot be compiled. Seasonal adjustment: As from the August 2001 issue of the ECB's Monthly Bulletin, seasonally adjusted data compiled by the ECB are shown in Table 8.2, part 2 (from February 2008 Section 7.2, Table 1) for the total current account and for main sub-items (goods, services, income and transfers). The approach relies on multiplicative decomposition through X-12-ARIMA (version 0.2.2). Goods raw data are first pre-adjusted to take into account "working day", "leap year" and "Easter" effects. Services include only a "working day" pre-adjustment. The seasonal adjustment for goods and services is carried out using these pre-adjusted series. Income and current transfers do not include any pre-adjustment. The seasonal adjustment of the total current account is carried out by aggregating the seasonally adjusted euro area series for goods, services, income and current transfers. Seasonal factors are revised at annual intervals or as required. Seasonally adjusted data are available on a monthly basis as from January 1997 onwards.

VI. Other Aspects

Footnotes

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