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QuestionWhat is the Flow of Funds Accounts? I sometimes hear that the aggregate of Japanese households' financial assets amounts to 1,800 trillion yen. Where can I confirm this?

Answer

The Flow of Funds Accounts (FFA) is a matrix of data that shows the outstanding assets and liabilities as well as the increase and decrease of assets and liabilities held by each economic entity in Japan, such as financial institutions, corporations, and households, in terms of each financial instrument (called transaction items) such as deposits and loans.

The matrix consists of the following three tables: (1) the financial transactions table, which shows the increase and decrease of assets and liabilities for each economic entity within a certain period as a result of financial transactions, (2) the financial assets and liabilities table, which records the outstanding assets and liabilities held by each economic entity at the end of a certain period as a result of financial transactions, and (3) the reconciliation between flows and stocks table, which records the difference in amounts between the assets and liabilities table and the transactions table.

The FFA makes it possible to grasp data such as the outstanding financial assets held by each economic entity at the end of every quarter. For example, it is sometimes said that the aggregate of Japanese households' financial assets amounts to 1,800 trillion yen. This can be confirmed by the outstanding assets of the Japanese household sector in the assets and liabilities table of the FFA. 1

  1. These assets include (1) financial instruments that are not necessarily recognized by individuals as financial assets -- for example, pension entitlements such as for corporate pensions and deposit money including deposits with golf courses -- and (2) settlement funds for business held by sole proprietorships, which are included in the household sector in the FFA.

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