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Impact of BPM6 on euro area balance of payments and international investment
position
Isabella BosettiRadenci, 7-9 November 2011
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Outline
• B.o.p. and i.i.p. statistics compiled by the ECB and their importance in EU policy making
• Most relevant changes introduced by BPM6 from the ECB perspective
– Methodological changes
– New treatment of transactions and positions
• The new ECB Guideline
– Main novelties
– Implementation timeline
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The importance of b.o.p. and i.i.p. in policy making
Euro area aggregates are used to:
� assess risks to price stability
� analyse the flows affecting monetary
conditions and exchange markets
� show the monetary presentation of bop
And also for:
� Economic analysis to assess risks to financial stability (ESRB and European Commission)
� the compilation of the RoW account in the quarterly euro area accounts
� And for the annual review of the international role of the euro
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The importance of b.o.p. and i.i.p. in policy making
National b.o.p. and i.i.p. are used to:
� monitor the divergence in competitiveness (ECB and European Commission)
� detect macroeconomic imbalances (European Commission):
o Current account balance, net i.i.p., % change of export market shares are 3 out of the 9 indicators of the Scoreboard
o Other relevant indicators are: current and capital account balance, net interest payments and net external debt
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New in BPM6: methodological changes
• Increased relevance of the i.i.p.
� Direct collection of price and
exchange rate effects
• Primary income:
– Accruals following the debtor
approach for debt securities
– Dividends recorded when they go ‘ex-dividend’
• Direct investment recorded on assets and liabilities basis
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New in BPM6: more detailed breakdowns
• Identification of 6 institutional sectors in portfolio investment and related income
• Breakdown by original maturity: short/long term for portfolio investment and other investment items
• More detailed items in :
– Primary and secondary income accounts
– Financial derivatives account
– Reserve assets
– And other investment:
�insurance, pension and standardized guarantee schemes
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New in BPM6: goods and services accounts
• Net exports of goods under merchanting (previous ‘merchanting and other trade-related services’) is moved to the goods account
• Manufacturing services on physical inputs owned by others (previous ‘goods for processing’) is moved to the services account
�The totals of the 2 accounts change, but the balance on goods and services is used as imbalance indicator
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New in BPM6: services and income accounts
• Financial intermediation services indirectly measured (FISIM) are isolated from the interest received/paid and are included in the services account
• In the primary income account interest calculations are based on “pure interest”
�The net current account balance will not change; while there will be revisions to net interest payments and to the services and income accounts, on total debits and credits
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New in BPM6: direct investment account
• Includes investments between “fellow enterprises”
�reclassification from the other investment account
�establishment of the EuroGroups Register
• Should include investment funds shares
�but for euro area internal consistency they will be classified in portfolio investment account
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New in BPM6: other investment account
• Allocation of special drawing rights
– Included in Other investment liabilities
�Minimal impact on net i.i.p.
• Monetary gold
– Distinction between gold bullion and unallocated gold accounts
�Potential impact on net i.i.p.
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New ECB Guideline
• It is the ECB’s legal instrument to impose legal requirements on the national central banks of the euro area.
• Its issuance is preceded by intensive discussions with all the national central banks
• The current Guideline (2004/15) is based on BPM5 methodology
• A new Guideline will be issued in early 2012, based on BPM6 standard components
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New ECB Guideline: BPM6 implementation
• Standard components not mandatory in ECB Guideline:
– details in transportation services
– breakdown between business and personal travel
– breakdown in personal cultural and recreational services
•Non-standard components in BPM6 mandatory for EA:
– more details in investment income account
– flows related to price and exchange rate revaluations in the financial account
– details in external debt by original maturity and remaining maturity in portfolio investment
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New ECB Guideline: BPM6 data publication
• First euro area aggregates following BPM6methodology will be published in November 2014
• Historical data will be converted to BPM6 format
• Monthly b.o.p.
• Quarterly b.o.p. and i.i.p.
– Euro area back to 2008
• Including the geographical breakdowns
– National data back to 1999
• Without geographical breakdowns
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IMF: BPM6 data publication
• Warning: the IMF will introduce BPM6 in their publications in 2012
– BPM5 euro area aggregates and national data will be converted to BPM6 automatically by the IMF
– These data may be revised in 2014 after the nationally tailor made conversion to BPM6 has been completed
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New ECB Guideline: timeliness improvements
• Quarterly b.o.p. and i.i.p. data currently reported at T+90 days will be anticipated:
• 2014: T+85
• 2017: T+82
• 2019: T+80
�Euro area accounts statistics available to the ECB Governing Council one month earlier from September 2015
�Euro area quarterly b.o.p. and i.i.p. published at T+90 in the medium term
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New ECB Guideline: simplification of reporting
• Eurostat and ECB data requests will be aligned
– Same file transmitted to both institutions
• Breakdowns currently reported at semi-annual and annual frequency will be reported quarterly
– Only monthly and quarterly reporting
• SDMX framework used for data exchange
– More intelligence possible for data mining and data validation checks
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Thank you for your attention!
Any questions?
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