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Changes in the financial account statistics data publication in June 2014

The contents, structure and publication date of the statistics published quarterly by the MNB under the title of “Financial accounts of the national economy (financial assets and liabilities of institutional sectors)” will change from the publication of comprehensive data released on 30 June 2014. The changes have been justified by the application of new international statistical methodology standards relating to national accounts, on the one hand (methodological changeover), and, simultaneously, general data revision of financial accounts statistics are carried out, on the other hand. The following section presents the main changes linked to the methodological changeover and the areas affected most by the comprehensive data revision. The changes will be implemented in the entire time series covered by the financial accounts. After the changeover, only time series featuring new content and structure will be available on the Bank’s website. This compilation aims to provide preliminary information to the users of statistics on the structure of and amending groups of data presented in the new data publication tables of financial accounts.


1. Main changes linked to the changeover in statistical methodology


1.1 Changes in the content and structure of financial instruments


The contents and structure of assets and liabilities included in the financial accounts will remain essentially unchanged under the new methodology, and most instruments will be presented in the same manner and with the same data content as before. The forthcoming changes affect Monetary gold and SDR (AF.1), Insurance technical reserves (AF.6) and Financial derivatives (AF.7). Rules regarding monetary gold and SDR approached the valid regulations relating to the other financial instruments yielding a more unified and symmetrical structure of financial accounts. Financial derivatives and insurance technical reserves are presented with expanded content and in greater detail on account of their increasing significance.
The main change in terms of contents (in line with the balance of payments statistics) is the recording of Monetary gold (AF.11) and SDR (AF.12) as liabilities and not only financial assets. This eliminates the discrepancy between the financial accounts of the national economy presented from the domestic and foreign perspective which stemmed from the classification of monetary gold and SDRs among resident assets (central banks) without being offset by any non-resident liabilities under the old methodology. Allocation and cancellation of SDRs are achieved through transactions instead of changes in volume under the new methodology.
New financial instruments unobserved so far in financial accounts are employee stock options and provisions for calls under standardised guarantees. As these instruments only play a minor role in Hungarian practice, at present estimates on employee stock options have not yet been made in the financial accounts, whereas those provisions for calls under standardised guarantees which are provided by general government are merely estimated and presented in the data publications on financial accounts (AF.66).
The classification and level of detail of financial instruments have also changed in some cases. The Debt securities (AF.3) category replacing the main instrument of Securities other than shares (AF.3) no longer includes financial derivatives, which are now presented as a separate main instrument among assets and liabilities (Financial derivatives, AF.7). Insurance technical reserves (AF.6) now include provisions for calls under standardised guarantees (AF.66).
The following table lists the new financial instruments applied in the financial accounts.

Instruments

Code

Monetary gold and special drawing rights

 F.1

  Monetary gold

 F.11

  SDRs

 F.12

Currency and deposits

 F.2

  Currency

F.21

  Transferable deposits

 F.22

  Other deposits

 F.29

Debt securities

 F.3

  Short term debtsecurities

 F.31

  Long term debt securities

 F.32

 Loans

 F.4

  Short term loans

 F.41

  Long term debt securities

 F.42

 Equity and investment fund shares

 F.5

  Listed shares

 F.511

  Unlisted shares

 F.512

  Other equity

 F.519

  Mutual fund shares

 F.52

 Insurance, pension and standarized guarantee schemes

 F.6

  Non-life insurance reserves

 F.61

  Life insurance reserves

 F.62

  Pension funds reserves

 F.63

  Provisions for calls under standardised guarantees

 F.66

Financial derivatives

 F.7

 Other accounts receivable/payable

 F.8

  Trade credits and advances

 F.81

  Other

 F.89

1.2 Changes in the content and structure of economic sectors


The delineation between the sector of financial and non-financial corporations in financial accounts produced in compliance with the new methodology has changed (substantive change), and the financial corporations sector is now presented in greater detail, broken down into more sub-sectors (structural change).


Under the new methodological standards, the group of financial services in the statistical sense and, consequently, the contents of the Financial corporations (S.12) sector have been expanded. Contrary to earlier practice, in addition to the financial intermediaries being in relation to public, those corporations that perform financial service activities, typically, in narrow range (within the corporate group) must also be regarded as financial vehicles in the new statistics. These corporations must be reclassified from the Non-financial corporations (S.11) sector to the Financial corporations (S.12) sector. A holding or group financing company that engages in passive financial intermediation within the corporate group — and qualifies as an independent institutional unit — must be classified into the Captive financial institution (S.127), a newly created sub-sector within the Financial corporations (S.12) sector. Those special purpose entities (SPEs) that are in relationship solely with non-residents and fulfil passive financial intermediary functions among non-resident corporate group members, have been transferred from non-financial corporations to financial corporations. The reclassifications entail a decrease in the stock of financial assets and liabilities of the non-financial corporation sector, and concurrently an increase in the financial assets of financial corporations in financial accounts. The changes are primarily reflected in the financial accounts including SPEs.


The new international methodological standards break down the Financial corporations (S.12) sector into nine sub-sectors instead of the previous five, with the level of detail of other economic sectors remaining unaltered. Within financial corporations sub-sectors, the Central bank (S.121) sub-sector corresponds to the former one, the old Other monetary institutions sub-sector, the Other financial intermediaries as well as Insurance corporations and pension funds sub-sectors are now each broken down into two sub-sectors. In addition to these, Captive financial institutions and money lenders (S.127) have been added as a new sub-sector to Financial corporations (S.12).
The following table indicates the new list of sectors applied in the financial accounts. 


Sectors and subsectors

ESA Code

Total economy (residents)

S.1

Non-financial corporations (S.11)

S.11

Financial corporations (S.12)

S.12

   Central Bank

S.121

Other monetary financial institutions

S.122-123

   Deposit-taking corporations

S.122

   Money market funds

S.123

Other financial corporations

S.124-127

Non monetary market funds

S.124

   Other financial intermediaries

S.125

   Other financial auxliaries

S.126

   Captive financial institutions

S.127

  Insurance corporations

S.128

  Pension funds

S.129

General government

S.13

  Central government

S.1311

  Local government

S.1313

  Social security funds

S.1314

Households

S.14

Non-profit institutions serving households

S.15

Rest of the world (non-residents)

S.2

1.3 Other methodological changes affecting data content


According to the old national accounts methodology, withdrawals from private pension funds to the public pension scheme (governmental takeover of pension funds reserves) were recorded as a one-off capital transfer to central government which increased the net lending of central government and reduced that of households by the amount taken over in the period of asset transmission. Under the new methodological rules, the transfer of wealth cannot affect the balance of sectors, and other accounts payable (AF.89) to households with the amount of pension assets must be recorded in the general government balance sheet. These other accounts payable must be decreased during pension disbursement periods.


2. Changes linked to the general data revision within financial accounts


Simultaneously with the implementation of the changes to international methodological standards, new data sources will also be incorporated and data corrections carried out, along with the revision of the estimation and calculation procedures used in the financial accounts. These mainly affect household (S.14) and non-financial corporation (S.11) data. Estimates of the foreign assets and investments of households, not observed directly, will be supplemented thus stock and flow data on holdings of foreign currency, deposits and equity of households will change. The availability of new data sources (tax returns, foreign bank data) confirms the modification of the earlier relevant estimates. Data on loans granted by households to non-financial corporations and borrowed by households from non-financial corporations as well as estimates on equity held by households have also changed due to the more intense utilisation of corporate annual reports and more accurate calculation procedures. The more complete utilisation of administrative corporate data sources (tax returns, annual reports) and data corrections allow a more accurate distinction and estimation of inter-company loans, equity and other accounts receivable of non-financial corporations.


3. Changes in the presentation and level of detail of data


Starting from the publication of the comprehensive financial accounts for 2014 Q1, the data release deadline will change from the first working day of the fourth month following the reference period to the last working day of the third month following the reference period. The publication dates for preliminary financial accounts on general government and households will remain unchanged. The earlier publication of balance of payments statistics will allow the earlier compilation of the full set of financial accounts.
The structure of the published tables will undergo minor changes in the wake of the methodological changeover, with the introduction of the sectoral and instrument breakdown presented under section 1, in line with the new methodological requirements. The time series tables will remain the backbone of the publication, showing stock and flow data of financial assets by economic sector. As a novelty, annual time series will also be published in parallel with quarterly ones. Another change is that, in addition to publication of the normal quarterly data tables not including special-purpose entities (SPEs), versions including SPEs for all time series tables will also be available. Tables not including SPEs will present the Other financial intermediaries (S.125), Financial auxiliaries (S.126) and Captive financial institutions and money lenders (S.127) sub-sectors in a consolidated manner under the designation Other financial corporations for purposes of transparency and data protection.