In response to the global financial crisis triggered by the collapse of Lehman Brothers in September 2008, the G-20 finance ministers and central bank governors endorsed a report (‘The financial crisis and infor- mation gaps’) in November 2009. The report calls for the development of financial accounts by sector (that is, statistics to identify the network relationship between sectors). Each country is now working on the com- pilation of such data. The Bank of Japan, in cooperation with relevant parties, is also making various efforts towards the further development and enhancement of the J-FFA.
First, securities statistics have been enhanced. By recompiling basic data for the FFA, the Bank of Japan started to release the amounts outstanding of securitised products in December 2011. Figure 4.8 shows that, while the securitised products market as a whole has been declining, the only securitised product that has continued to grow is mortgage-backed securities issued by the Japan Housing Finance Agency.
Second, the Bank of Japan is working to develop data on bonds and loans by remaining maturity (time to maturity). The current J-FFA does not include statistics on bonds and loans classified by the remaining periods to maturity. The development of such data, which are likely to be different from data by original maturity, is vital in assessing liquidity risk (see Figure 4.9 for the difference between the remaining and original
0 5 10 15 20 25
0 10 20 30 40 50
2007 2008 2009 2010 2011
ABCP
Trust beneficiary rights
Asset-backed-bonds (Others)
Asset-backed-bonds (MBS issued by JHFA) (Amounts outstanding, trillion yen) (y/y % chg.)
Asset-backed-bonds (backed by real estate properties)
y/y % chg. of MBS issued by JHFA
Figure 4.8 Amounts outstanding of securitised products Source: BOJ, ‘Amounts Outstanding of Securities Products’.
27%
73%
16%
84%
1. Remaining maturities 2. Original maturities
One year or less More than one year
Figure 4.9 JGBs’ remaining and original maturities at the end of fiscal year 2011 Notes: JGBs consist of treasury discount bills, central government securities and bonds issued by institutions in the Fiscal Investment and Loan Program (FILP) . Total amount outstanding of JGBs is 887 trillion yen.
Source: I-N information systems.
maturities of the JGBs).10In the meantime, each G-20 country is work- ing on compiling sector-by-sector figures for bonds and loans classified into those with a remaining period of one year or less and those with a remaining period of more than one year, aiming to capture maturity mismatch in balance sheets. The target date for the release of such data is 2014, although some countries and regions have already started. For example, the euro area has put in place a framework in which, since June 2010, loan data are to be reported to the European Central Bank (ECB), and publication of such data has begun.
Third, the Bank of Japan intends to expand the sectoral network analysis beyond lending and borrowing relationships. For instance, the network structure of shares can be identified by using the share own- ership survey conducted by five domestic stock exchanges throughout Japan. Figure 4.10 shows the state of ownership of shares listed on stock exchanges at the end of fiscal years 1992, 2000 and 2010.11 While it is preliminary, the main features can be summarised as follows.
First, the household sector has consistently been a large net share- holder. While other sectors also hold significant amounts of shares, they issue shares as well. Thus, on a net basis, the household sector becomes an important funding source for the corporate sector. Second, the overseas sector has emerged as a major investor in Japanese equi- ties. At the end of fiscal year 1992, its total amount of shareholding was merely 22 trillion yen (6 per cent of the total market capitalisa- tion), but by the end of fiscal year 2010 it totalled 83 trillion yen (27 per cent), almost quadrupling its investment during the previous 18 years, while the total amount of shares issued in domestic equity market remained more or less the same. Third, the other financial insti- tutions sector has become a net shareholder to the non-financial private corporations, while depository corporations and insurance and pen- sion funds have not. In other financial institutions, stock investment trusts and securities companies have mainly increased their investment in shares. Besides, the other financial institutions sector also includes the central bank, whose shareholding totalled 1.7 trillion yen at the end of fiscal year 2010 as a result of unconventional policy measures.
Meanwhile, depository corporations reduced their shareholdings from 55 trillion yen at the end of fiscal year 1992 to 18 trillion yen in fiscal year 2010. So did the insurance and pension funds, whose shareholdings declined from 64 trillion yen in fiscal year 1992 to 33 trillion yen in fiscal year 2010.
Finally, the Bank of Japan is making various efforts towards the enhanced usage of the flow-of-funds statistics. Behind this is a belief
Depository corporations General governments
Nonfinancial corporations (mainly private corporations) Rest of the world
Insurance and pension fundsOther financial institutions Households
18 trillion yen + 58 + 22
+ 5 + 72 + 8 146
+ 60 + 68
3 + 74 + 10 236
Depository corporationsThe end of fiscal 1992The end of fiscal 2000The end of fiscal 2010 General governments
Nonfinancial corporations (mainly private corporations) Rest of the world
Insurance and pension fundsOther financial institutions
28 trillion yen Households
+ 26 + 63 + 19206
Depository corporations General governments
Nonfinancial corporations (mainly private corporations) Insurance and pension fundsOther financial institutions
6 trillion yen Households Figure4.10WhoholdswhosesharesintheJapanesestockmarket Note:Lightgreycirclesindicateover-holdingsectorsanddarkgreycirclesindicateover-issuingsectors.Bothcirclesizeandamountsofmoneyindica amountsoutstandingofeachsector’snetholding;ifasector’samountisplus(minus),thesectorisover-holding(over-issuing).Arrows’vectorsand thicknessindicateamountoutstandingofnetover-holdingfromasectortotheothersector. Theclaim/debtrelationshipbysectorintheabovenetworkstructureisbasedonthatoftheshareownershipsurvey.However,thecategorisation someholdingsectors(forexample,socialsecurityfunds)isroughinthissurvey,asthesesectorsareestimated:theresidualamountsoutstandingo obviouslyidentifiedsectorsaredividedamongothersectorsaccordingtoeachsector’sholdingamountoutstanding.Moreover,‘otherfinancial institutions’isthesumof‘otherfinancialintermediaries’,‘financialauxiliaries’and‘centralbank’.‘Households’includes‘privatenon-profit institutionsservinghouseholds’. Inthischart,thenetworksaredrawnonthepercentoftotalmarketcapitalisationbasis. Source:Fivedomesticstockexchanges(Tokyo,Osaka,Nagoya,FukuokaandSapporo)andBOJ,‘Japan’sFlow-of-FundsAccounts’.
that it is vital, as a statistics compiler, to explain the main features of the statistics to the public as well as policy-makers rather than simply releasing the data. This ‘release-and-explain’ strategy appears to be par- ticularly important in the case of the flow-of-funds statistics due to their complex nature. Against this background, the BOJ publishes every quar- ter a set of visual summaries, which consists of ‘Basic Figures of the Flow of Funds’ and ‘Flow of Funds – Overview of Japan, US, and the Euro area’. Based on these materials and the data, the BOJ hosts a press conference at 8:50 am on the day of release – just before the financial markets open – in order to help reporters understand the main features of the statistics. Furthermore, the flow-of-funds statistics provide impor- tant insight into the assessment of financial stability. For example, many charts using the flow-of-funds data, such as recent developments in the total credit-to-GDP ratio and total assets of financial institutions, are presented in the BOJ’s Financial System Report, and they help policy- makers form the basis for assessing the stability of Japan’s financial system.