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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 International investment position 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 international investment position (i.i.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 setting-up and maintaining the concepts and definitions related to the i.i.p. The ECB requires quarterly euro area i.i.p. data (within three months of the end of the month to which the data relate and annual data on euro area i.i.p. statistics nine months after the date to which the data relate. Euro area-wide aggregated data for the i.i.p. has been published by the ECB since the December 1999 release of the ECB Monthly Bulletin. Definitions: This annual statement of the external assets and liabilities of the euro area reveals the structure of the euro area's external financial position and complements the b.o.p. data for monetary development and foreign exchange market analysis. Stock data also provide a check on the plausibility of b.o.p. flows. The total change between two end of period positions can be broken down into (i) changes due to transactions (b.o.p. flows) and (ii) other changes for each financial account item. "Other changes" include price changes, exchange rate changes and other adjustments (e.g. write-offs, reclassifications). As of  2007,  the details of “Other changes” are available for the annual i.i.p. 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 Classifications: The breakdown as well as the concepts and definitions are based on the BPM5 and are consistent with the breakdown of the quarterly b.o.p. The i.i.p. breakdown required and published by the ECB conforms, to the greatest extent possible, to the standards set out in the BPM5, except that: - within direct investment, the breakdown is limited to (i) equity capital and reinvested earnings and (ii) other capital; - the other investment item is somewhat simplified by (i) not requiring any distinction between loans and deposits and (ii) not requiring any maturity breakdown. Institutional sectors: Positions of 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. Positions on the assets side of the euro area portfolio investment account, i.e. relating to securities issued by residents of EU Member States which are not participating in the euro area or of third countries, are broken down by sector according to the institutional sector of the euro area resident holder. Positions on the liabilities side of the euro area portfolio investment account, i.e. 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’s balance of payments and international investment position. The annual i.i.p. is 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 include Brazil, India, China Mainland and Hong Kong.

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), Malts (as form 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, for statistical purposes, as not resident within the euro area, implying that all positions 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 i.i.p. statistics.

III. Accounting Conventions

2.4.1 Valuation Valuation methods: In principle, market prices are used as the basis of valuation for stocks. Thus stocks of assets and liabilities are valued at the market prices in effect at the end of each reporting period, with the exception of direct investment stocks which are, to large extent (unquoted shares, loans and deposits), valued on the basis of own funds at book values. In practice, however, some deviations from the market principle may occur. Book or other values from the reporting agents' balance sheets may be the only readily available source for the valuation of assets and liabilities, and may differ from the market value. Suitable methods (e.g. security-by-security, where possible, or indices) are used to approach the market value. 2.4.2 Recording basis Time of recording: In line with the BPM5, the ECB principally requires recording 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.

IV. Nature of the Basic Data Sources

3.1.1 Source data collection programs The euro area i.i.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 note 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: The ECB compiles the figures for the euro area i.i.p. by aggregating the euro area Member States' positions vis-à-vis non-residents of the euro area for the i.i.p., except for portfolio investment. An enhanced compilation of the euro area investment position has been published since December 2002. The improvement shows assets and liabilities separately (previously only net positions were available) and are compiled using the positions with counterparts outside the euro area (i.e. con an extra-euro area basis). However, i.i.p. data prior to end-1999 are compiled on a net basis by aggregating national i.i.p. data since a distinction between Member States' positions with residents of other euro area countries and those with non-residents of the euro area was not possible before the formation of the euro area. Due to a different compilation method, data prior to end-1999 may not be fully comparable (see Box 9 in the Monthly Bulletin of December 2002 (page 71 to 73)) See also: http://www.ecb.europa.eu/stats/external/investment/html/index.en.html. The compilation methods for portfolio investment is based on a different approach, owing to the difficulties in identifying the holders of securities issued by domestic residents. The aim is to record the holdings by euro area residents of securities issued by euro area non-residents ("euro area assets"), and the holdings by euro area non-residents of securities issued by euro area residents ("euro area liabilities"). The assets side can be measured directly, with a sectoral breakdown of the euro area resident investors. The liabilities side cannot be measured directly, because reporting agents in the euro area often cannot identify the holding of securities that they have issued. Instead, the liabilities side is estimated as euro area residents' total holdings of paper issued by euro area residents minus the holdings of such paper by residents of the euro area. Seasonal adjustment: (not applicable).

VI. Other Aspects

Footnotes

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