Metadata


Financial Accounts


0. Registration entry for subjects


0.1 Name

Financial Accounts

0.2 Subject area

National accounts

0.3 Responsible authority; office, division, person etc.

Jinny Gupta
Statistics Iceland
Department of National Accounts and Public Finance
Email: thjodhagsreikningar@statice.is
Tel: +354 528 1000

0.4 Purpose and history

The purpose of financial accounts is to present a comprehensive accounting framework regarding the economy as a whole and for individual sectors. Financial accounts cover all sectors of the economy and its financial instruments.
Financial accounts are compiled in line with international standards of National Accounts, i.e. the European System of Accounts 2010 (ESA 2010), which is the guide of National Accounts by Eurostat and consistent with the System of National Accounts (SNA) 2008 manual. The ESA 2010 standard, the successor of ESA95 was implemented by the department of national accounts and public finance implemented in September 2014. The new guide has had some influence on the previously published financial accounts, as the changes are applicable to more thorough definitions of sectors and instruments, as well as information on changes in transactions, other volume changes and revaluation.

Statistics Iceland received a three year grant of the Instrument for Multi-Beneficiary Pre-Accession Assistance of the European Union (IPA). The main purpose of the IPA grant is to provide a solid ground for the development of future framework and the compilation process of the Icelandic financial accounts.

In May 2010, an agreement was signed by the Central Bank of Iceland and Statistics Iceland regarding the work and publication of financial accounts. According to the agreement Statistics Iceland will be responsible for gathering and balancing data for the following four sectors; 1) Non-Financial companies, 2) The government and its subsectors, 3) Households and, 4) Non-Profit Institutions serving Households (NPISHs). The Central Bank of Iceland will collect data for the 5) Financial institutions and their subsectors and, 6) Rest of the World. Finally, Statistics Iceland will be responsible for the balancing of the economy and all final revisions.

0.5 Users and application

Financial Accounts are an important tool to analyze financial transactions between domestic sectors themselves and, further, between the domestic sectors and the rest of the world.
The accounts can be used to evaluate the effects of economic policies on financial assets and liabilities, and can shed light on the performance of the economy. Furthermore, the accounts can be used to examine the influence of changes within the financial environment on holders and issuers of financial instruments, e.g. by looking at changes in interest rates and prices. It is possible to examine changes of large financial funds of financial institutions and the use of these funds. Financial transactions within financial institutions can reflect the liquidity of the companies and changes that occur within them. The difference of the final position of stocks are often due to revaluation of assets and other volume changes that can be traced to shifts on markets i.e. the stock- and currency markets. Moreover, financial accounts can be used in the comparison between countries.

0.6 Sources

A wide variety of sources and data are used for the compilation of financial accounts:
  • The General government and its subsectors; data gathered from "The central government accounts" provided by the State Financial Management Authority.
  • Rest of the world; International Investment Position (IIP), calculated by the Central Bank of Iceland.
  • Financial institutions and subsectors; Balance sheets. Data collected by the Central Bank.
  • Non-financial institutions; Balance sheets from the Internal Revenue Directorate.
  • Households and NPISHs; Balance sheets from the Internal Revenue Directorate.

0.7 Legal basis for official statistics

See Act No. 163/2007 regarding Statistics Iceland.

0.8 Response burden

Financial accounts are based on registered information that has in many cases already been collected for other assigned purposes. As has previously been mentioned, the Central Bank has collected data of all financial institutions and the rest of the world. The public finance division at Statistics Iceland provides data for the general government. In exceptional cases data is requested directly from companies but never from individuals. Most data is already available within companies and institutions. The response burden is therefore kept at minimum.

0.9 EEA and EU obligations

According to Act No. 2223/96, it is stated that national accounts should be coherent and comparable within the member states of the EU and the EEA.
Publication and transmission of financial accounts data are in line with the Regulation (EC) No. 1392/2007 of the European Parliament and of the Council. See: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:324:0001:0078:EN:PDF

1. Contents


1.1 Description of content

Financial accounts are classified by participants of the financial markets, that is the economic sectors, and by financial instruments. Classification of instruments is dependent on their characteristics, e.g. liquidity and other factors defined by regulations. The Icelandic accounts are on non-consolidated basis, although consolidated accounts for the general government are available.

The purpose of financial accounts is to provide information on financial assets and liabilities of the country in question, such as stocks, transactions and other economic changes. Other economic changes can be divided into revaluation (e.g. due to price changes) and other volume changes. At the process of balancing the accounts, an asset of one sector is always registered as a liability of another sector. Financial accounts give insights to the financial instruments that the sectors use to fund their activity.

1.2 Statistical concepts

According to ESA 2010, financial instruments are in total 8 or as follows:
AF.1 Monetary gold and Special Drawing Rights (SDRs). This is only applicable to the Central bank.
AF.2 Currency and deposits
AF.3 Debt securities
AF.4 Loans
AF.5 Equity and investment fund shares or units
AF.6 Insurance, pension and standardized guaranteed schemes
AF.7 Financial derivatives
AF.8 Other accounts receivable/payable

According to ESA 2010 each instruments has sub-instruments. However, the Icelandic accounts are not capable to provide such information at this stage.

The ESA 2010 accounts for nineteen sectors including total domestic sectors and the rest of the world. The domestic sector can be divided to five main sectors and thirteen subsectors, while the nineteenth sector, Rest of the world, accounts for all foreign institutions that hold assets or liabilities within the Icelandic economy. The sectors are the following:

S.1 Domestic sectors (Iceland)
S.11 Non-financial corporations
S.12 Financial corporations
Monetary financial institutions (MFI)
S.121 Central bank of Iceland
Other monetary financial institutions (OMFI)
S.122 Deposit taking corporations except the central bank
S.123 Money market funds (MMF)
Corporations except ICPF
S.124 Non-money market investment funds
S.125 Other financial intermediaries
S.125X Financial institutions in winding-up proceedings (special Icelandic sector, not according to ESA2010)
S.126 Financial auxiliaries
S.127 Captive financial institutions
Insurance companies and pension funds
S.128 Insurance companies
S.129 Pension funds
S.13 General Government
S.1311 Central government
S.1313 Local government
S.1314 Social security funds
S.14+S.15 Households and Non-profit Institutions serving households
S.2 Rest of the world

2. Time


2.1 Reference periods

The reference period of the financial accounts is the calendar year. The accounts are on annual basis.

2.2 Process time

The first two publications only covered financial stocks and followed the elder version of the national account standard ESA 95. The first dataset available according to the ESA2010 standard, which covered both stocks and flow data, was transmitted to Eurostat in September 2014 and published in Iceland in October same year.

2.3 Punctuality

The financial accounts are published according to Statistics Iceland advance release calendar.

2.4 Frequency of releases

Annual preliminary data for the economy as a whole will be published with 9 months' time lag (t+9) and final data with 15 months' time lag (t+15). The transmission of the accounts to international organizations will take place at the same time. The Icelandic Financial Accounts will be accessible in Icelandic and English on the official webpage of Statistics Iceland.

3. Reliability and security


3.1 Accuracy and reliability

The accuracy of Financial Accounts can be ensured by systematically balancing the data and by a thorough classification of both instruments and sectors according to ESA 2010. Instruments are normally listed at market value, unless otherwise stated. Instruments that are originally denominated in foreign currency need to be converted to Icelandic krona at the market rate of the reference date the transaction occurred. Furthermore, it can be complicated to evaluate some of the financial instruments due to lack of data and market information. For instance, all shares, both listed and unlisted, are treated as unlisted shares/equity due to the small size of the Icelandic stock market.

As some data sources are more reliable than others, it is fairly common that the asset value of one sector is inconsistent with the liability value of the counterpart sector due to various factors such as differences in coverage, timing and valuation. In such cases, at first attempt, data inequalities are ironed out as much as possible by investigating the sources; as a second step, a ranking order of sources, and thus sectors, has been established to determine which amount we will treat as the final figure representing the amount of asset outstanding in the economy, depending on the reliability of data sources in general. Thus amount belonging to the sector considered higher on the ranking order is considered a more reliable value for the asset in question and thus taken as the final amount representing the asset stock in the economy. ,

As regards data reliability, some sectors are considered more reliable than others. The reliability ranking of sectors with regard to accuracy of data is as follows:

Ranking of reliability of sources:
1. The general government
2. The Central Bank of Iceland
3. Rest of the World
4. Financial institutions
5. Financial companies under winding-up proceedings or of creditors negotiations
6. Non-financial corporations (S.11)
7. Households and Non-Profit Institutions Serving Households (S.14 & S.15)

3.2 Sources of errors

Inaccuracy of various data sources can affect the accuracy of the financial accounts´ figures. However, the conceptual consistency and, over time, the uniform adaptation of sources and systematical balancing contribute to the reduction of the inaccuracy of the financial accounts.

A number of difficulties occur at the balancing process, e.g.:

  • Some data is only accessible as a total sum of values of some or all sectors, and thus, it can be hard to subdivide the data in question between sectors.
  • It was impossible to subdivide debt securities and financial derivatives (AF.3+AF.7) in the first publication of the accounts according to ESA 2010. This is mainly due to the fact that financial institutions have yet not fully evaluated the financial derivatives since the collapse of the financial markets in 2008. Moreover, some differences can be found in the valuation method of the financial derivative data that is available, e.g. some institutions record on current book value while others at market value dated when the transaction took place.
  • Structural breaks can be found in the time-series, especially around the financial crisis. Hence, it is difficult to depict a perfect picture of the economic situation that took place as no real market value existed at the same time the Krona depreciated tremendously.
  • It is important to realize that loans are listed in the financial accounts at their book value as can be found in the balance sheets of the financial corporations. Differences can be found between sectors S.122 and S.125X, as the former have registered their claims they bought from the old banks at a discounted value.
  • Inconsistency can be found in data between S.2 and S.12 due to differences in recording values and methods of the instruments. Each case has been evaluated to eliminate the discrepancy.
  • Inaccuracy in data transmitted by households and NPISHs (S.14 & S.15) and non-financial corporations (S.11) to the Internal Revenue Directorate.

3.3 Measures on confidence limits/accuracy

No specific measurements on confidence limits and accuracy in financial accounts have been conducted.

4. Comparison


4.1 Comparison between periods

It is important to apply international and coherent standards when producing financial accounts from year to year, to make the time-series as comparable between periods as possible. When fundamental changes occur in the process of data collecting or the methods applied, the comparability can be affected. Thus, when the new ESA 2010 standard was applied, the whole period from 2003 was altered accordingly to prevent unnecessary structural breaks.

4.2 Comparison with other statistics

Comparability of financial accounts to other national statistics can be limited. Definitions of certain instruments can vary between sectors and companies, and the methodology of recording assets and transactions can also differ.
Comparability to foreign statistics is quite common and should be reliable if the countries follow the same international standards of national accounts.

4.3 Coherence between preliminary and final statistics

Financial accounts figures are never considered as final. However, 15 months post the end of the reference year (t+15) the figures are not marked as preliminary, cf. section 2.4.

5. Access to information


5.1 Forms of dissemination

  • News, released on Statistics Iceland´s website
  • Statistics, categorized statistical web tables
  • Statistical Series, Hagtíðindi
  • Eurostat and OECD databases, accessible on their websites.

5.2 Basic data; storage and usability

Source data is stored at Statistics Iceland. Access to more detailed data than has already been published is granted on an individual basis. In these cases the main principle is to uphold the confidentiality of the data in guidance with Statistics Iceland Rules of Procedure for Treating Confidential Data, which can be accessed on Statistics Iceland's website.

5.3 Reports

The European system of accounts 1995 (ESA 95), chapters; 2, 5 and 7.
European system of accounts 2010 (ESA 2010). Draft.
System of National Accounts (SNA), 1993 and 2008.
IMF Working Paper: An integrated Framework for Financial Positions and Flows on a From-Whom-to-Whom Basis: Concepts, Status, and Prospects. By: Shrestha, M, Mink, R., Fassler, S. (2012). See: http://www.nber.org/chapters/c12835.pdf
Manual on sources and methods for the compilation of ESA 95 financial accounts. 2nd edition 2011 update. A methodology guide by Eurostat.

5.4 Other information

Further information about specific parts of the financial accounts are given by the employees of the department of national accounts and public finance, see list of staff.
© Hagstofa �slands, �ann 13-4-2016