1. Australian Financial Accounts: O VERVIEW OF D ATA S OURCES AND M ETHODS Within a Whom to Whom Framework Amanda Seneviratne 1

2. Why ? Recently the ABS has had number of requests about how ABS compiles financial accounts quarterly in a to-whom- from-whom (counterparty) framework This area of national accounting has received more attention since the global financial crisis and the G20 finance ministers data gaps initiative The note is only an introduction to the subject –Detailed compilation methods are dependent on national institutional settings and data availability 2

3. Intersectoral Net Financial Transactions: June Quarter 2011 3

4. Inter Sector Financial Relationships The inter sector financial relationship maps can be used as a guide to priorities and methods for data collection and compilation The number of institutional units in each sector is a guide to the difficulty in measuring the sector quarterly, the timeliness and possibly the reliability of the measurement It is clear we cant afford thorough quarterly surveys of households or non-financial corporations The following is a simplification in terms of sectoring and instruments. It covers both stocks and flows. 4

5. Approximate Number of Institutional Units 5 Households ~ 9 million Financial Corporations 3000 + 400K Pension Funds Rest of the World Very Many General Government 3000 of which 20 financing Non-Financial Corporations ~ 2 million

6. Financial Corporations Relatively small number of large institutions –Setting aside the large number of small self-managed pension funds Maintain good accounting records Prudential supervision for some types We aim for complete enumeration of most types of financial corporation Interagency (APRA/RBA/ABS) cooperation in data collection, quality assurance and usage. 6

7. Data for Financial Corporations is central building block for measurement 7 Households ~ 9 million Financial Corporations 3000 + 400K Pension Funds Rest of the World Very Many General Government 3000 of which 20 financing Non-Financial Corporations ~ 2 million

8. Data for Financial Corporations is central building block for measurement 8 Households ~ 9 million Financial Corporations 3000 + 400K Pension Funds Rest of the World Very Many General Government 3000 of which 20 financing Non-Financial Corporations ~ 2 million 1.Almost complete coverage of Financial Corporations 2.Data broken down by counterparty (subsectors) 3.Regulatory and ABS surveys 4.Intermediaries data from regulator used for regulatory, monetary aggregates and financial accounts

9. Rest of World Financial assets, liabilities, transactions, and other flows with rest of world are required for quarterly International Investment Flows and Position statistics. –Difficult to do financial accounts without this significant dataset Some recompilation from BPM6 to 2008 SNA is required Data by domestic counterparty should exist in this dataset 9

10. Foreign Investment (IIP) Data is already collected for balance of payments purposes 10 Households ~ 9 million Financial Corporations 3000 + 400K Pension Funds Rest of the World Very Many General Government 3000 of which 20 financing Non-Financial Corporations ~ 2 million X Data confrontation Domestic counterparties required

11. Rest of World (cont.) Note financial corporations / rest of world relationship now has two sets of observations Data confrontation for quality assurance of both datasets Must decide what to publish in financial accounts –Australia financial accounts usually consistent with IIP –Means re-balancing financial corporations –The luxury of choosing with whom to be inconsistent. 11

12. General Government Australia is a federation: Commonwealth, State, Territory and Local governments However, financial management practices mean that only a handful of agencies have significant borrowing and investment roles –Commonwealth and State Treasuries / Department of Finance –State central borrowing authorities, Australian Office of Financial Management A small ABS collection of about 20 agencies gives almost complete coverage Securities issues in a security by security database 12

13. Government Financing Agencies GFS data not adequate for this purpose in Australia Small ASB collection 13 Households ~ 9 million Financial Corporations 3000 + 400K Pension Funds Rest of the World Very Many General Government 3000 of which 20 financing Non-Financial Corporations ~ 2 million X X Data Confrontation X X

14. General Government (cont.) General government data overlaps with financial corporations and IIP datasets –More data confrontation opportunities –More decisions about best data, including Reserve Bank versus Dept. of Finance Data structured in accordance with IMF GFS not sufficient –Counterparty, instrument detail –Valuation principles, accrual standards – more explanation of differences (especially to IMF) 14

15. Non-financial Corporations and Households Securities issuance by non-financial corporations from equity and debt market sources (stock exchange, clearance houses) Small survey of large corporates to track security holdings and accounts payable / receivable –All other financing covered by other sources Households residual in securities markets and accounts payable / receivable 15

16. Small corporate survey for accounts payable/receivable 16 Households ~ 9 million Financial Corporations 3000 + 400K Pension Funds Rest of the World Very Many General Government 3000 of which 20 financing Non-Financial Corporations ~ 2 million X X X Residual in securities markets

17. Non-financial corporations and Households (cont.) Periodic confrontation with household wealth surveys –Micro / macro comparisons No non-financial corporation financial asset and liability data available in tax system or in summary from corporate regulators Financial Instrument Supply / Use compilation framework mitigates lack of direct data 17

18. Small corporate survey for accounts payable/receivable 18 Households ~ 9 million Financial Corporations 3000 + 400K Pension Funds Rest of the World Very Many General Government 3000 of which 20 financing Non-Financial Corporations ~ 2 million X X X Residual in securities markets Compilation in Financial instrument Supply / Use framework provides a cross check and plausible residual allocation

19. Compilation Framework: Financial Instrument Supply / Use Tables Ideally, independent measures of supply and use Unconsolidated to a large extent –Intra-household sector relations consolidated –Other intra sector asset/liabilities add value to supply / use tables –Note: ABS thinks unconsolidated sector income and financial accounts are not meaningful. 19

20. Supply / Use Framework Example 1: Transferable Deposits 20

21. Transferable Deposits Example Supply data are from banking regulator (APRA) Use data are from various data sources, including counterparty data collected by regulator To the extent that use data do not sum to supply, balancing requires adjustment of weakest data source(s), in this case usually other private non-financial corporations 21

22. Supply / Use Framework Example 2: Listed Equity of Private Non-financial Corporations 22

23. Listed equity example Unconsolidated Supply from stock exchange (adjusted for SNA concepts) Use from various sources Balanced with weakest data source in this case the residual is allocated to households for which there is no data source –Note: plausibility of residual is assessed 23

24. More Information Australian National Accounts: Financial Accounts (cat. no. 5232.0) (and related products)Australian National Accounts: Financial Accounts amanda.seneviratne@abs.gov.au D.Cullen@abs.gov.au http://www.apra.gov.au/statistics/ for regulatory datasets and reporting formshttp://www.apra.gov.au/statistics/ 24