Methodological notes International investment position and external debt
International investment position (i.i.p.)
The international investment position (i.i.p.) is a financial statement setting out Germany’s financial assets and liabilities vis-à-vis the rest of the world. It is published as a quarterly stock statistic.
The German i.i.p. observes the concepts and methodological requirements set down in the sixth edition of the IMF’s Balance of Payments and International Investment Position Manual (BPM6). For the EU Member States and euro area countries, the resulting statistical data submission requirements are laid down in a European Commission Regulation. Furthermore, a Guideline of the European Central Bank (ECB) stipulates the reporting requirements for Eurosystem national central banks.
The assets and liabilities of German residents are broken down by function into the investment categories “Direct investment”, “Portfolio investment”, “Other investment”, “Financial derivatives and employee stock options” and “Reserve assets”. The sectoral breakdown distinguishes between five domestic economic sectors: “Monetary financial institutions (MFIs excluding the Bundesbank)”, “Financial corporations excluding MFIs”, “Non-financial corporations, households and non-profit institutions serving households”, “General government” and “Bundesbank”. All these subdivisions are shown as assets (claims on non-residents), liabilities (liabilities to non-residents) and as the resulting balance (net value). In each case, the balance shows whether the domestic economic sectors have a net creditor or net debtor position vis-à-vis other countries. The stocks recorded in the i.i.p. are each valued at market prices and exchange rates as at the end of the reporting period.
The i.i.p. is a statistical statement which refers to a point in time; it completes the period-based balance of payments statistics which record the value of all economic transactions between residents and non-residents in a given period. The integrated statement of external statistics reconciles i.i.p. and balance of payments by breaking down changes in the i.i.p. into financial account transactions and revaluation effects resulting from exchange rate or market price fluctuations and other adjustments.
The i.i.p. is one of the data categories for the external sector within the IMF’s data standard, Special Data Dissemination Standard Plus (SDDS Plus), to which Germany adheres. Metadata are available on the IMF’s Dissemination Standards Bulletin Board (DSBB). They describe the methodological, conceptual and institutional framework of the German i.i.p.
Further methodological details on the compilation of the balance of payments and international investment position for each of the EU member states can be gleaned from the “European Union Balance of Payments and International Investment Position statistical sources and methods - B.o.p. and i.i.p. book”.Weitere methodische Informationen zur Erstellung der Zahlungsbilanz und des Auslandsvermögensstatus in den Euroraum-Mitgliedsländern enthält die Veröffentlichung "European Union Balance of Payments and International Investment Position statistical sources and methods - B.o.p. and i.i.p. book".
External debt is part of the international investment position and thus follows the same methodology. Furthermore, an IMF manual defines specific details (External Debt Statistics: Guide for Compilers and Users). Gross external debt constitutes only those financial assets and liabilities with fixed interest and/or principal repayment dates. These include, for example, debt securities, loans and deposits. By contrast, financial claims with no repayment obligation, such as shares, direct investment and investments in real estate, are excluded. Focusing on external debt with fixed payment obligations makes it possible to observe the liquidity or solvency risk to which a country may be exposed.
German external debt is broken down by the five economic sectors: “Monetary financial institutions (MFIs excluding the Bundesbank)”, “Financial corporations excluding MFIs”, “Non-financial corporations, households and non-profit institutions serving households”, “General government” and “Bundesbank”. Direct investment loans are shown separately. The external debt is one of the data categories for the external sector within the IMF’s data standard, Special Data Dissemination Standard Plus (SDDS Plus), to which Germany adheres. Metadata are available on the IMF’s Dissemination Standards Bulletin Board (DSBB). They describe the methodological, conceptual and institutional framework of Germany’s external debt.
External position of the Bundesbank, International reserves and foreign currceny liquidity of the Eurosystem
The external position of the Bundesbank records its financial assets and liabilities vis-à-vis non-residents at the end of the month; marked to market and valued at the applicable exchange rates; it is part of the international investment position. The reserve assets including gold are shown on the asset side. “Other investment” primarily includes intra-Eurosystem claims, e.g. claims from TARGET2 balances; “Portfolio investment” mainly relates to long-term debt securities from issuers within the euro area. The Bundesbank's “external liabilities” comprise non-residents’ credit balances at the Bundesbank as well as external liabilities related to euro banknote issuance and the counterpart of special drawing rights by the IMF.
The data template on international reserves and foreign currency liquidity provides a detailed overview of the German international reserves and other foreign currency assets, as well as potential and predetermined short-term foreign currency inflows and outflows (including Federal government claims and liabilities). In addition to traditional balance sheet data, it also contains off-balance-sheet positions (where available).
The reserve assets and foreign currency liquidity statistics are determined in accordance with the methodological requirements set out in the sixth edition of the Balance of Payments Manual of the International Monetary Fund (BPM6), the Guideline of the European Central Bank ECB/2013/25, the “Statistical Treatment of the Eurosystem’s International Reserves” manual, and “International Reserves and Foreign Currency Liquidity, Guideline for a Data Template”.
The official reserve assets and the data template are data categories within the IMF’s data standard, Special Data Dissemination Standard Plus (SDDS Plus), to which Germany adheres. Metadata are available on the IMF’s Dissemination Standards Bulletin Board (DSBB). They describe the methodological, conceptual and institutional framework of the German international reserves and foreign currency liquidity.
External positions of enterprises
The external assets and liabilities arising from the loans and trade credits of domestic enterprises (including investment companies but not their money market funds) are recorded in “External positions of enterprises” at the end of each month, the data being broken down by type of loan, maturity, creditor and debtor country as well as by euro and foreign currency. Credit relationships with affiliated enterprises are shown separately. They do not include participating interests in foreign enterprises, non-residents’ participating interests in the equity capital of domestic enterprises or securitised claims and liabilities vis-à-vis non-residents.
These data on enterprises’ external positions are used to draw up the German balance of payments and the German international investment position in line with the international requirements set out in the sixth edition of the IMF’s balance of payments manual (BPM6). The IMF’s international concepts require some adjustments, meaning that the balance of payments and international investment position data do not directly reflect the information contained in the primary statistics on “External positions of enterprises”.