The national accounts in 2016National accounts - Base 2010
Financial accounts in 2016National accounts - Base 2010
Warning: Financial accounts for years 2014, 2015 and 2016 will be published in autumn 2017. Data relative to the previous accounting campaign are available in "The national accounts in 2015".
Annual Financial accounts
There are two types of financial accounts: financial flow accounts (for a given period) and balance sheet accounts (end of period).
Financial flow accounts
The financial flow accounts track the financial transactions carried out by economic agents. They come after the sequence of institutional sector accounts, with financing capacity as the articulation between them. Financing capacity is defined as the surplus of resources from revenue over uses such as consumption and investment. In theory financing capacity should also correspond to the financial account balance, i.e. the surplus of acquisitions of financial assets over resources resulting from borrowing or other capital contributions (liabilities). In practice these two balances, calculated from different sources, are not identical and are correlated by an adjustment item.
The flows report the creation, transformation, exchange, transfer or disappearance of an economic value. Two types of financial flows may be distinguished:
- Financial transactions, relating to the acquisition of financial assets or the contracting of debt,
- Other changes in assets, which in the financial field are mainly holding gains and losses resulting, for example, from exchange-rate or stock-market variations, or from the bankruptcy of a debtor.
The financial flow accounts are recorded as variations in assets and liabilities, rather than as resources and uses.
Balance sheet accounts
The balance sheet accounts present the stocks - or outstanding amounts - of financial assets and liabilities at the end of the period.
Financial assets are economic assets that come in the form of means of payment or financial receivables. Liabilities are debts. These assets and liabilities form the financial wealth held by a unit or a sector at a given time (end of year), and the balance between the two is the net financial worth.
The financial accounts of the various sectors and the rest of the world for a given year are grouped in the financial operations tables.
The published tables are simplified tables. More detailed results in terms of financial instruments and institutional sectors or currency are published on the website of the Banque de France.
The moment when financial flows are recorded
ESA 2010 counts flows on an accruals basis, i.e. at the moment when an economic value, a debt or a bond is created or transformed or when it disappears. In particular, interests are recorded over the accounting period during which they are due, whether or not they were actually paid over that period.
The accrued interest flows recorded in the non-financial accounts are broken down into flows of interest due on the one hand (giving rise to a financial transaction in accordance with the double-entry accounting principle), and flows of interest not due on the other. Bearing in mind currency effects, these latter flows correspond to the change in the stock of interests not due between the start and the end of the period under consideration.
The choice of when to record has significant impacts on the financial account: the flows entered on an accruals basis which have not yet been paid (e.g. interest not due) must be represented as receivables and debts in the financial account.
Classification of financial transactions
The classification of financial transactions is that of ESA 2010, enriched by transactions linked to the recording of interests not due on deposits and debt securities, and on loans.
Additionally, flows of payments involved in interest rate swaps and forward rate agreements are recorded as derivatives, encompassing all those that have a market value (tradable or OTC options, warrants, futures, swaps, and FRA).
Financial companies (S12)
The financial companies sector (S12) covers all companies whose main function is to provide financial intermediation services.
Financial intermediation consists in channelling funds from institutional units that have surpluses towards units seeking funds. Financial intermediaries are not merely agents acting on behalf of these units. They bear a risk by acquiring financial assets and by entering into commitments on their own account.
Financial corporations are divided into three groups: financial intermediaries other than insurance corporations and pension funds (S12A), financial auxiliaries and captive financial institutions and non-institutional money lenders (S12E), and insurance corporations and pension funds (S12I).
Financial intermediaries other than insurance corporations and pension funds (S12A) encompass the following subsectors:
- Central Banks (S121) including all financial corporations and quasi-corporations whose primary function is to issue currency, maintain its internal and external value and manage all or part of a country's foreign exchange reserves. In France, S121 comprises the Banque de France, the Exchange Stabilisation Fund, and the Overseas Departments Note-Issuing Bank (French Antilles and French Guiana);
- Deposit-taking institutions other than the Central Bank (S122), including all financial corporations and quasi-corporations whose main activity is to receive deposits (or close substitutes), to grant loans, or to make investments in securities for their own account (commercial banks, savings banks, the Banque Postale, municipal and rural and agricultural credit institutions, banking cooperatives and mutual lending banks, the Caisse des Dépôts et Consignations, corporate banks, private banks, corporations engaged in granting mortgages, etc.);
- MMF - money market funds (S123), encompassing financial corporations and quasi-corporations other than those in S121 and S122, whose main activity is to issue investment fund shares or units as close substitutes for deposits and, for their own account, to make investments primarily in money market fund shares/units, short term debt securities and deposits. These funds include investment trusts, mutual funds, open-ended investment funds and other collective investment schemes whose shares or units are close substitutes for deposits;
- Non-MMF investment funds (S124), encompassing all collective investment schemes except those classified in the MMF subsector S123, whose main activity is to issue investment fund shares or units that are not close substitutes for deposits, and, on their own account, to make investments primarily in financial assets other than short-term financial assets, and in non-financial assets (usually real estate). These funds include investment trusts, mutual funds, SICAVs and other collective investment schemes whose shares or units are not close substitutes for deposits (open-ended investment funds, closed-ended investment funds with a fixed capital share, real estate investment trusts, funds of funds, hedge funds, etc.);
- Other financial intermediaries except insurance corporations and pension funds (S125), encompassing all financial corporations and quasi-corporations whose main activity is the provision of financial intermediation services by incurring liabilities in forms other than cash, deposits or investment fund units, or in relation to insurance, pension and standardized guarantee schemes. They are financial vehicle corporations engaged in securitization transactions, security and derivative dealers, financial corporations engaged in lending and specialized financial corporations.
Financial auxiliaries and captive financial institutions and non-institutional money lenders (S12E) encompass:
- financial corporations and quasi-corporations whose main activities are closely related to financial intermediation but without actually belonging to this category (insurance brokers and advisers, loan brokers, securities brokers, investment advisers, portfolio management companies, IPO management corporations, financial engineering corporations not issuing securities, currency exchange offices and bank card groups, etc.);
- financial corporations and quasi-corporations that are neither engaged in financial intermediation nor in providing financial auxiliary services, and where most of either their assets or their liabilities are not transacted on open markets (certain holding companies, certain "brass plate" companies, etc.).
Insurance corporations and pension funds (S12I) encompass :
- financial corporations and quasi-corporations whose primary function is to supply financial intermediation services resulting from risk pooling mainly in the form of direct insurance or reinsurance activities (life and non-life insurers, mutual health insurers, provident funds). These companies' commitments are mainly technical insurance provisions;
- autonomous financial corporations and quasi-corporations whose primary function is to supply financial intermediation services resulting from pooling of the social risks and needs of the insured. Pension funds, which are distinct from mandatory social insurance schemes and have a total autonomy of decision, provide the insured with income on retirement (and in some cases benefits after death or disabled benefits). Currently, they are almost non-existent in France.
Information sources and data collection
The financial accounts are built on the compilation of highly varied data. At the core of the system are accounting data from financial institutions, completed by information from other sectors.
Like monetary statistics, the financial accounts use the accounting documents of credit institutions and data on insurance companies, centralised by the financial sector's Prudential Supervisory Authority.
The financial accounts of general government are drawn up by the Ministry of Finance and Public Accounts.
The stock-flow account of the rest of the world is drawn up via France's balance of payments and international investment position by the Balance of Payments Directorate of the Banque de France.
A number of data relating to the financial transactions of non-financial enterprises are compiled by INSEE from tax balance sheets. They mainly concern commercial loans and current accounts.
As regards stock market transactions, the Banque de France keeps a file of bond issues on the domestic market and on the euro market. This file along with foreign market data listed by the balance of payments allow the compilation of statistics on net issues and outstanding by debtor sector. In conjunction with the French subsidiary of Euronext, the Banque de France also compiles statistics on share issues by analysing official journals.
The price concept used by ESA 2010 to elaborate flows and outstanding is that of the "market price". Financial transactions are thus recorded at transaction value:
- When the transaction involves means of payment in the national currency, the transaction value is equal to the amount of the payment means exchanged,
- When the transaction involves means of payment in other currencies, the transaction value is equal to the amount of the payment means exchanged, converted into the national currency via the exchange rate in force on the market at the date of payment.
Outstanding financial assets and liabilities have to be valued in current prices and counted for an identical value, whether they are recorded as assets or as liabilities.
The choice of valuation method strongly influences the quality of the financial accounts, not only in outstanding but also in flows.
As regards outstanding securities, the general principle used is to record outstanding securities and bonds, both assets and liabilities, at their market value. However, debt securities are recognized for their nominal value.
The valuation of quoted securities, either bonds or shares, in the liabilities of the various sectors does not generally pose too many problems. A difficulty arises in estimating the value of unquoted shares. The solution recommended by ESA 2010 consists in applying to the amount of equity (capital plus reserves) of unlisted companies the "market capitalisation to equity" ratio of equivalent listed companies, subject to application of an illiquidity discount set at a flat rate of 25%. This calculation is made for around ten economic sectors.