Information on changes
Why have international standards been revised?
The balance of payments standard was last revised in 1993. Since then, ongoing globalisation and developments in the finance industry have given rise to a range of phenomena, which place new demands on statistics. For instance, the proliferation of special purpose entities (SPEs) within multinational companies has led to growing complexity in global direct investment relationships, which can compromise data quality. Moreover, it has become necessary to align the BPM6 with the System of National Accounts 2008 (SNA). Some of the changes in BPM6 are thus attributable to the harmonisation of BPM6 with SNA 2008. The revision of these manuals will allow developments in international economic relations to be reflected more accurately and improve consistency between statistical systems.
What impact does the bilateral agreement on statistics with the EU have on the balance of payments and the international investment position?
In 2004, Switzerland signed the second bilateral agreement with the EU, which covered a number of areas including collaboration in the field of statistics (bilateral agreement on statistics). The agreement relates to statistics that are important for cooperation between the parties. Balance of payments statistics were integrated into the agreement in 2011. In line with EU requirements, this agreement commits Switzerland to delivering balance of payments and international investment position data, as well as detailed information on its trade in services and direct investment, to Eurostat from 2015. Most of the balance of payments data is broken down geographically; in the past, this had only been the case for specific items. The international investment position will not be broken down geographically for the time being.
Which SNB surveys have been revised?
In the light of these new requirements, the SNB has fundamentally overhauled its current account surveys at a conceptual level and has added new components and country details. The reporting population has also been significantly expanded in order to capture not just some, but all, industries operating abroad. The current account surveys were introduced in 2012 (current account surveys).
The design of the financial account surveys has likewise been thoroughly revised. The changes relate to the adoption of methodological innovations contained in BPM6 and BMD4 and the extension of the geographical breakdown to the quarterly surveys. The reporting population will remain unchanged. The revised financial account surveys will be introduced in 2014 and 2015 (financial account surveys).
What are the key changes?
Overall, the framework of the existing balance of payments standard (BPM5) will be retained; however, it has been expanded and the number of standard components, in particular, has been increased. This will bring greater granularity to the statistics. Some key concepts have also been revised, resulting in some changes to the way the data are presented. The major changes are outlined and explained below.
What are the key changes affecting direct investments?
The calculation and presentation of direct investments are most affected by the alignment with the new handbooks. The principal changes are as follows:
- Both the direct investment financial and income flows in the balance of payments, as well as assets and liabilities in the international investment position, are to be reported on a gross (asset/liability) basis. To date, the directional principle)* – according to which assets and liabilities as well as interest flows in intragroup lending were netted against each other – has been applied.
- Profit will now consistently be calculated according to the current operating performance concept. Swiss statistics have not stipulated the use of a specific concept in the past.
- Contributions to cover losses and exceptional dividend payments (super-dividends) are now reported in the financial account.
- Intragroup lending by insurance companies will be entered under direct investment. Until now, this item had not featured in Swiss statistics.
- The geographical breakdown of the equity capital of participations abroad will be brought into line with international standards. In future, only the equity capital in the country of the immediate direct investment enterprise will be recorded.
Which changes will affect merchanting?
Merchanting, whereby a merchanting trader purchases and resells goods abroad without changing their condition and without the goods crossing the domestic border, is now classified under goods rather than services. Furthermore, gross receipts and expenses will now be presented in addition to the balance from merchanting. Expenses will be entered as negative receipts in the receipts column of goods exports. As in the past, merchanting will continue to be shown in the tables as a separate component.
Which changes will affect Special Drawing Rights?
IMF Special Drawing Rights allocated to member countries as part of a quota increase are now treated as liabilities and are entered as net incurrence of liabilities by the Swiss National Bank (SNB) in the financial account (other investment) and as liabilities in the international investment position.
How will institutional sector classification work under BPM6?
The current classification of institutional sectors is to be extended. As in the past, the central bank, banks and the public sector are treated as sectors. However under BPM6, the ‘other sectors’ aggregate is divided into two sub-sectors – ‘other financial corporations’ and ‘non-financial corporations, households, and non-profit institutions serving households (NPISHs)’. Primary and secondary income, portfolio investment abroad, financial derivatives and other investment will be broken down by sector.