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The Implementation of 2008SNA Recommendations in Japan's Flow of Funds Accounts

July 18, 2014
Research and Statistics Department
Bank of Japan

Overview

The Flow of Funds Accounts (FFA) provide a record of the financial transactions and the consequent claim/debt in the separate economic agents within our economy, such as households, enterprises and the government.  These accounts are suitably designed to give a comprehensive overview of Japan's financial structure and are widely used for purposes of economic and financial analyses. The FFA are compiled in accordance with the international standard for the System of National Accounts and are conducive to international comparisons of financial structures.

In 1999, the Bank of Japan revised its FFA in conjunction with the implementation of the 1993 System of National Accounts (1993SNA).  With the view to enhancing its statistical quality, the periodical revisions bring the FFA into line with new developments in financial activities, new accounting standards as well as increased source data. The FFA will be revised once again in the first half of 2016 with the implementation of the new statistical standard (2008SNA).

The thinking behind the efforts towards an alignment with the recommendations of 2008SNA is as follows. Firstly, the 2008SNA is designed to enhance the accuracy of data in the non-bank financial sector, such as pension funds and investment funds, and will increase the effectiveness of FFA for purposes of broader economic and financial analyses.  Secondly, conforming to the 2008SNA recommendations will help to improve the international comparability of the statistics.  The benefit of conforming to the 2008SNA in this respect is evidenced by the fact that the G20 Finance Ministers and Central Bank Governors Meetings and the IMF have advocated the adoption of the 2008SNA when they set the international framework for statistics standardization.  Thirdly, aligning the FFA with 2008SNA is desirable as a way to maintaining consistency with Japan's national accounts which will also be revised in accordance with 2008SNA recommendations at the time of the next benchmark-year revision around 2016.

Specific changes to the FFA are: a) a thorough application of the accrual basis in employment-related pensions accounts*1 and a review of the records relating to retained earnings and dividends which will help to increase the accuracy in the compilation methods of financial transactions; b) an introduction of new transaction items such as employee stock options and standardized guarantees; c) an introduction of 'captive financial institutions' as a new financial sector.

In October 2013, the Bank of Japan announced its revision programme and invited the public to participate in the reviewing process.  The BOJ is deeply grateful for the 30 invaluable contributions received from a wide range of academics, economists and business groups.  The revised FFA, reflecting these contributions, will be released during the first half of 2016, and the specific release date will be announced in due course.  The new data will be available from 1Q, 2005 onward.  The release of any data preceding this point will be a topic of further discussion.  Going forward, the BOJ will continue its efforts to improve the FFA.

  • *1As it stands, the accrual basis is applied to the listed companies whenever possible, but not to the unlisted companies.

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Inquiries

Financial Statistics Group, Economic Statistics Division, Research and Statistics Department

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