Following the Money U.S. Finance in the World Economy (1995) / Chapter Skim
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2 CURRENT U.S. DATA SYSTEMS
2 CURRENT U.S. DATA SYSTEMS
Pages 43-74
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From page 43... ...
international capital transactions and the major sources of Unilateral transfers cover international transactions in which goods, services, or financial assets are transferred between U.S. residents and residents of other countries with no requirement for payment.
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From page 44... ...
The current account of the U.S. balance of payments covers exports and imports of goods and services, unilateral transfers, and incomes on investment, while the capital account records financial transactions.
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From page 45... ...
Or they want to know why a country is gaining or losing official reserves. Under the double-entry concept, the sum of all transactions should be zero: both sides of each transaction should offset one another and the balance of the current account should equal that of the capital account, with opposite signs.
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From page 46... ...
its investment has to include net foreign investment {positive or negative) to be complete.3 During the past decade, for example, the United States financed an important part of its federal budget cleficit by incurring a current account deficit, which showed up cumulatively, as a reduction in net foreign assets.
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From page 47... ...
Congressional committees, CBO ~ BEA Bureau of Economic Analysis BIS Bank for International Settlements BOPs Balance-of-payments accounts BPD Balance-of-Payments Division in BEA CBO Congressional Budget Office CEA Council of Economic Advisers FRB Federal Reserve Board ~ l BEA publishes BOPs in SOB and in other publications and provides data to users International organizations (IMP, OECD, BIS, etc.) ~ , _ National Trade ~ Data Bank IID and BPD produce annual estimates of investment positions, reconciling stocks and flows and related investment incomes BOPs are used in flow of funds accounts (FRB)
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From page 48... ...
By the same token, a deficit in the current account must be financed by some combination of a decrease in claims on nonresidents and an increase in liabilities to nonresidents so that the result is a decline in net foreign assets held by the domestic economy. The identity defines the relationship among the variables.
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From page 49... ...
Data on shortand long-term international capital transactions, by country, are examined to assess market pressures and determine worldwide capital flows. Data on cross-border deposits are analyzed to determine their significance for implementation of monetary policy.
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The international investment position of the United States (June) Foreign direct investment in the United States Direct investment position and related flows of capital, income, and royalties and license fees (June)
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direct investment abroad: 1989 benchmark survey results, by Jeffrey Lowe and Raymond Mataloni, Survey of Current Business, October 1991 i, Valuation of the U.S. net international investment position, by J
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From page 52... ...
assets abroad and of foreign assets in the United States resulting from capital flows in and out of this country over time (as adjusted for factors affecting their values) is annually compiler!
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From page 53... ...
official reserve assets, net 5,763 3,901 -1,379 Gold 0 0 0 Special drawing rights -1 77 2,3 16 -537 Reserve position in the international Monetary Fund FOrelgn currencies U.S. government assets, other than official reserve assets, net U.S.
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2. The Treasury Department, using the Federal Reserve banks as agents, collects data on portfolio investment, including inter
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Type of Investment Position Net international investment position of the United States With direct investment positions at current cost With direct investment positions at market value]
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government agencies on their international capital transactions. It also compiles data on the international official reserve assets ant!
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From page 57... ...
In that year, federal funneling for major statistical programs was about $2.4 billion, of which $944 million was allocated to ten major statistical agencies.7 Much of the data collection system on U.S. international capital transactions, which has been cleveloped and refined over the years, depends on collaboration between BEA, the Treasury Department, and the Federal Reserve system.8 For instance, it is essential that all definitions used be consistent, that the coverage of respondents not be duplicated, that there not be major gaps clue to missing potential respondents or to new or unusual types of international transactions or market participants, and that requirements of timeliness be met.
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From page 58... ...
investment positions is provident by the International Investment and Trade in Services Survey Act of 1984. As stated in the act, direct investment is clefined as "the ownership or control, directly or indirectly, by one person of 10 per centum or more of the voting securities of an incorporated business enterprise or an equivalent interest in an unincorporated business enterprise." Portfolio investment is defined as all investment that is not "direct investment." These definitions conform to the general guidelines provided by the International Monetary Fund 1993a)
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From page 59... ...
in which a foreign company holds 10 percent or more of voting stock or equivalent interest when the affiliate's assets, annual sales, or annual net income exceed $20 million. Annual reports are required from all significant direct investors to confirm the quarterly data and provide additional operating data.
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~ o ~ z ce 4 o ~ 4 3 ° ~ .
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Estimates made of equity capital increases and decreases for delinquent reports-estimates evaluated and added to reported data 5. No blowup for intercompany debt capital flows undertaken at present-research under way 6.
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. PORTFOLIO INVESTMENTS In principle, all international capital flows other than direct investment between private U.S.
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, by major types of foreign residents (such as official institutions, unaffiliated foreign banks, own foreign offices, and other foreign parties as a group) , and by an extensive list of partner countries.
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Analyze data and develop analytical tables for BOP presentation in SCD Provide data on portfolio capital for incorporation into capital account of BOPs BEA Bureau of Economic Analysis FRB Federal Reserve Board BOP Balance of payments FRBNY Federal Reserve Bank of New York BOPs Balance-of-payments accounts SCB Survey of Current Business BPD Balance of Payments Division in Bureau TIC Treasury International Capital of Economic Analysis FICURE 2-7 Portfolio investment data: sources and output.
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~ ~ ·- ~ In ~ ~ cry ¢ ~ ~ ce o ~ ~ o ~ 7 ~ _ hi,—4 ~4 0 -4 .
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For foreign holdings of U.S. securities, the Treasury Department also conducts periodic benchmark surveys.
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The geographic information is the same as in the other TIC reports; financial claims and liabilities denominated in foreign currencies are shown separately.
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BEA Bureau of Economic Analysis FRBNY Federal Reserve Bank of New York TIC Treasury International Capital Transactions FIGURE 2-8 Treasury International Capital (TIC) reports: data sources and output.
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BEA also includes in the balance-of-payments accounts the changes in U.S. international official reserves as reported by the Treasury Department, including changes in the gold stock, foreign currencies held, and special drawing rights and the reserve position with the IMF.
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official reserves and other U.S. government capital for incorporation into capital account of BOPs BOPs Balance-of-payments accounts BPD Balance of Payments Department in BEA FRB Federal Reserve Board FRBNY Federal Reserve Bank of New York IMF International Monetary Fund OMB Office of Management and Budget SDR Special drawing rights FIGURE 2-9 U.S.
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From page 72... ...
~ ^~ ~ ~ ~ poses by looking at the difference between the balance of the loan reported for the current quarter and that reported for the previous quarter. tAs noted above, grants are classified as unilateral transfers and shown in the current account of the balance of payments, not the capital account.)
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From page 73... ...
international investment position are derived from the BEA and TIC systems clescribed above. However, some flow data are supplementecl by the collection of flats on outstanding positions, as in the case of direct investment, and other banking and nonbank data are derivecl from original position statements as reported by banks and nonbanks.
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From page 74... ...
with the rest of the world economy; (2J they are used to calculate the investment income flows (earnings) on portfolio claims and liabilities, which are reported in the current account of the balance of payments; and t3)
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