Consolidation in the French financial accounts

1. Banque de France Dominique Durant Consolidation in the French financial accounts OECD Working Party on Financial Statistics 6-7 October 2003

2. Outlines • France follows as far as possible the ESA95 regulation and Eurostat’s recommendations • Implementation in the French financial accounts • General remarks • Consolidation by operation • Consolidation by sector and sub-sector • Results of the consolidation in 2001 (semi-final) • Asset side • Liability side • Foreseen improvements • Conclusion

3. 1. France follows as far as possible the ESA95 regulation and Eurostat’s recommendations • As a matter of principle, flows and stocks between constituent units of sectors and sub-sectors are not consolidated. • For reason of comparability, non consolidated data should be based on a complete picture of all financial transactions, assets and liabilities. • A definition of consolidation (art. 1.58). • Consolidation rules apply at the sector and sub-sector level.

4. 2. Consolidation in the French financial accountsa. General remarks • Consolidated accounts are available : • for stocks, transactions, revaluations and other changes in volume. • only in a semi-final and final version, not yet in a provisional version. • at sector level (S11, S12, S13, S14-15), sub-sector level (S121, S122, S123, S124, S125, S1311, S1313, S1314, S14A, S14B, S15) and some national subdivisions of sub-sectors. • The sector’s consolidated accounts do not equal the sum of the corresponding consolidated sub-sector’s accounts. • Consolidation has impact, neither on the “Rest of the world” nor on net financial worth.

5. 2. Consolidation in the French financial accountsb. Consolidation by operation • A full consolidation is highly demanding concerning the information on counterpart sector/sub-sector according to ESA95 classification. • So far, long-term securities are not consolidated, because the information on holders of securities issued is not sufficient. • There is no room for consolidation, when the operation involves “by nature” two different sectors. • For all other operations, the information on counterpart is either collected, or estimated and included in the financial account database.

6. 2. Consolidation in the French financial accountsc. Consolidation by sector and sub-sector • The accuracy of consolidated data depends on the quality of the information available for the individual units included in the sector/sub-sector: • the quality is high (individual balance sheets with information on counterpart sectors) for general government and financial institutions excluding financial insurance companies and financial auxiliaries • the quality is medium (aggregated balance sheets without information on counterpart sectors) for insurance corporations and non-financial corporations • the quality is low (counterpart information only) for financial auxiliaries, households and non profit institutions serving households. For these sectors/sub-sectors, no consolidation is made.

7. 3. Results of consolidation in 2001 (semi-final)a. Asset side

8. 3. Results of consolidation in 2001 (semi-final)b. Liability side

9. 4. Foreseen improvements • Consolidated provisional accounts will be the result of the future computerised production of full quarterly financial accounts. • To consolidate long-term securities, the reshaping of the survey conducted on resident custodians is foreseen in order to complete the information on holders of securities.

10. 5. Conclusion • The data used for consolidation, namely the information on counterpart sector, may enhance the quality of the financial accounts. • However, the costs that may be incurred in the collection of such information should be compared with the potential benefits.