4.2 Financial developments from the J-FFA’s
4.2.3 Detailed sub-categories of transaction items
Finally, this section looks at financial activity in Japan by examining the detailed sub-categories of transaction items and sectors.
In Japan, as the funds raised by the general government through JGB issuance have increased, the amount of JGBs held by each sector has grown as well. Figure 4.6 shows the outstanding balances of government securities (represented by the size of circles), the share that government securities make up in a particular sector’s total financial assets (vertical axis) and the share of total government securities held by each sector (horizontal axis). The chart shows that, in Japan, government secu- rities holdings by depository corporations and insurance and pension funds have increased, reaching 357 trillion yen (39 per cent of the total amount outstanding of the JGBs) and 201 trillion yen (22 per cent), respectively. Holding by overseas investors has also gradually increased,
JapanUnited States 201 78 0
20
40
60 6040200
(Government securities' share of each sector's total financial assets, %) Depository corporations Insurance and pension funds Rest of the world
Shaded circles : amounts outstanding at the end of 2011 White circles : amounts outstanding at the end of 2000 (Eachsector's share of amounts outstanding of government securities, %)
020
40
60 6040200
(Government securities' share of each sector's total financial assets, %) Depository corporations 0.3 Insurance and pension funds 1.0
Rest of the world
Shaded circles : amounts outstanding at the end of 2011 White circles : amounts outstanding at the end of 2000 (Eachsector's share of amounts outstanding of government securities, %)
4.7 trillion dollar 357 trillion yen Figure4.6Treasurysecuritiesheldbymainsectors:JapanandUnitedStates Notes:InJapan,‘Treasurysecurities’areJGBs,whichequalthesumoftreasurydiscountbills,centralgovernmentsecuritiesandFiscal-Investment- -Loan-Programbonds.IntheUS,thisiscomposedoftreasurybillsandothertreasurysecurities(excludingsavingbonds,becauseoftheir unmarketability).TheUS’sdefinitionoffinancialintermediariesisreferredtoin‘FlowofFunds–OverviewofJapan,theUSandtheEuroarea’,in materialreleasedquarterly. Source:FRBandBOJ,‘Japan’sFlow-of-FundsAccounts’.
and now stands at 78 trillion yen (9 per cent). In the United States, over- seas investors have become ever more important as the principal holders of the US government securities. With respect to the euro area, sector- by-sector information on government securities holdings issued within the area is not available due to data constraints.
Next, the network of lending and borrowing relationships between different sectors is analysed. For Japan, one can identify such net- works by relying on the Detailed Flow-of-Funds Accounts (D-FFA), where the assets of one sector can be linked to the liabilities of another.7 Figure 4.7 shows this network for Japan, as well as for the euro area for comparison.8 In Japan, loans from depository corporations to private non-financial corporations and households are the principal channels of
Nonfinancial corporations (mainly private
corporations) 342
Nonfinancial corporations (mainly private
corporations) 128 5.3
1.2 311
Households
6.1 Households Insurance and
pension funds +47
Insurance and pension funds
+0.2 Depository corporations
+480 trillion yen
Japan Euro Area
Depository corporations +13 trillion euro
Other financial intermediaries
+0.3 Other financial
institutions +234
Rest of the world
+20
Rest of the world
General government
1.3 General government
Figure 4.7 Who lends to whom among main sectors in 2011: Japan and Euro Area
Notes: Light grey circles indicate over-lending sectors and dark grey circles indicate over-borrowing sectors. Both circle size and amounts of money indicate amounts outstanding of each sector’s net lending; if a sector’s amount is plus (minus), the sector is over-lending (over-borrowing). Arrows’ vectors and thickness indicate amount outstanding of net over-lending from a sector to the other sector.
The Japanese network structure is estimated by the following method. First, the network of loans by private and public financial institutions is according to D-FFA. With regard to the network of other loans (Bank of Japan loans, call loans and money, bills purchased and sold, loans by the non-financial sector, instalment credit, repurchase agreements and securities lending transactions), one sector’s asset is divided among other sectors according to each sector’s liabilities in terms of amount outstanding. Moreover, ‘other financial institutions’ is the sum of ‘other financial intermediaries’, ‘financial auxiliaries’ and ‘central bank’. ‘Households’ includes ‘private non-profit institutions serving households’.
The network structure of the euro area is created from ECB data, which is called
‘Who-to-whom detail’ and published in the Euro Area Accounts.
In this chart, the networks are drawn on per cent of nominal GDP basis.
Source: ECB and BOJ, ‘Japan’s Flow-of-Funds Accounts’, ‘Detailed Flow-of-Funds Accounts’.
funding. In this regard, the network in the euro area is very similar. How- ever, the chart also highlights differences between the two economies.
In Japan, loans from other financial institutions – primarily loans from public financial institutions – are also substantial, while this is not the case in the euro area. With respect to the United States, these data are not available. While Figure 4.7 shows the network of lending and borrowing only for seven major sectors, the J-FFA makes it possible to examine such networks in greater detail for a larger number of sub- categories. In contrast, for the euro area, this is not possible due to data constraints.9
Thus, even when compared with similar data for other major economies, the J-FFA is a source of rich and detailed data that meet the needs of a variety of statistics users and make it possible to comprehensively capture economic activity in Japan from a financial perspective.