Considerable logistics are required before a national survey can be conducted. This chapter provides some practical advice based on the experience of Task Force members. The chapter covers:


Considerable logistics are required before a national survey can be conducted. This chapter provides some practical advice based on the experience of Task Force members. The chapter covers:

  • a timetable;

  • legal and confidentiality considerations;

  • compiling, maintaining, and using a register of respondents;

  • choosing/developing a computer package to process the survey results; and

  • quality control.

I. Introduction

109. The Coordinated Survey requires considerable preparation by individual national compilers if it is to be a success: from preparing a timetable, to consulting potential survey respondents, to deciding upon the software packages that can be used to process the survey returns. This chapter discusses some of the preparatory steps and provides practical advice based on the experience of the experts on the Task Force. In the event that national compilers might also require additional advice, a network has been established, linking compilers with considerable expertise in conducting portfolio investment surveys. The address to contact is provided in paragraph 17.

II. Timetable

110. In preparing for the Coordinated Survey, the national compiler’s first step is to produce a timetable. It serves two main purposes: tasks are identified, and their sequencing is established. A timetable will help ensure the success of a national survey.

111. Each country’s own timetable will depend on its circumstances. For example, those countries that have never organized a portfolio investment position survey will obviously have a different timetable than those countries that conduct them regularly.

Nonetheless, based on collective experience of the countries represented on the Task Force, a broad framework is set out below, which can be adapted and, if need be, expanded to meet local circumstances:

  • Early 1996: Begin preliminary discussions with potential respondents, to provide a broad overview of what is to occur at end-December 1997 and to help determine the type of survey to be undertaken, that is, (1) end-investor, custodian, or mixed and (2) aggregate or security-by-security.

  • Early 1996: Determine under whose authority it will be conducted; if need be, seek agreement from the appropriate regulatory bodies.

  • Around mid-1996: Prepare draft survey forms and discuss with a sample of potential respondents.

  • Around mid-1996: Determine approximate quantity and type of data to be collected and undertake initial investigations on how the data should be reported and processed. In this regard, consult with a sample of potential respondents.

  • Around mid-1996: Begin development of a detailed register of potential respondents.

  • By end-1996: Inform all potential identified respondents of the survey.

  • By March 1997: Begin seminars, etc. to educate respondents about the survey.

  • By March 1997: Finalize survey forms and send them to all respondents, so that they can set up computer systems, etc.

  • Around mid-1997: Conduct trial run with a sample of respondents. All other respondents should be reminded of the survey.

  • End-December 1997: Reference date for the Coordinated Survey.

  • End-March 1998: Survey data due from respondents.

  • Up to mid-June 1999: Report survey data to the IMF.

III. Legal and Confidentiality Considerations

112. In order to conduct the national survey, compilers will need the necessary legal or administrative authority to require survey respondents to report information on portfolio investment holdings and to address concerns survey respondents may have about the confidentiality of data supplied.

113. Each country is unique in regard to these considerations. But presented below is Italy’s position as an example.

Italian Experience

114. In Italy, the regulations for the collection of data on cross-border and foreign currency activity are contained in Article 21 of Law No. 148/1988:

Article 21—Information on currency movements for statistical purposes

  • (1) The Italian Foreign Exchange Office, for the purposes of statistical information, may require authorized banks, other authorized institutions and, according to directives from the Interministerial Committee for Credit and Savings, operators and other parties concerned, to send data and information (periodically or in samples) on foreign exchange and cross-border transactions in which they have, in whatever capacity, been involved.

  • (2) Information and data collected shall be processed for each bank, class of transaction and operator without naming the operators themselves and then stored in archives to which the Bank of Italy may have access insofar as the execution of its duties requires.

  • (3) Information and data shall be treated as Official Secrets until they are published; they shall be made available to the Treasury Minister who may use them in the preparation of its six-monthly report to Parliament on currency movements and, upon request, to the Minister of Foreign Trade.

  • (4) Statistics produced by aggregating data from at least three subjects and excluding references to a single operator may also be made available by the Italian Foreign Exchange Office to the Central Statistics Institute, to national and international public institutions, to authorized banks and, upon payment, to research organizations and other private sectors.

115. The regulations were extended in May 1990 when a Ministerial Decree, put forward by the Interministerial Committee for Credit and Savings, enabled the Italian authorities to collect transactions data from nonbank operators. In October 1995, another directive from the same Committee enabled the Italian Foreign Exchange Office to collect position data from nonbanks.

116. In preparing for their national survey, the Italian authorities needed to address the issue of confidentiality. Article 21 guarantees the anonymity of the data supplied by operators. Confidentiality is not simply entrusted to a generic “official secrecy” or even to a more specific “statistical secrecy” (i.e., the prohibition of disclosure of data referring to a single person) but, rather, is embodied in the very rules of collecting, processing, and storing the data. Under the second paragraph of Article 21, “the information and data collected shall be processed for each bank, class of transaction and operator without naming the operators themselves....” Furthermore, to meet the legal requirements, the Italian Foreign Exchange Office cancels respondents’ names immediately after the data reported have been validated.

117. For the purposes of the Coordinated Survey, the Italian Foreign Exchange Office will have to choose between two alternatives: to require a legislative amendment to the statistical law for changing the principle of anonymity, or to draw up the national survey on portfolio investment in the same way as required for transactions data.

IV. Compiling, Maintaining, and Using a Register of Respondents

118. Producing a register of survey respondents (register) is an important function for the conduct of any national survey. However, countries participating in the Coordinated Survey will need to ensure that any register complies with the relevant data protection legislation. In some countries, if a register is maintained on a computer system and includes information about any identifiable individual, that information may be used only for an authorized purpose.

119. This section, based on the practical experience of Task Force members, presents some background on compiling and maintaining a register, ideas about what can be stored on the register (and on a computerized register), and finally an explanation of how the register can be used during the national survey. No register can be developed until national compilers decide how they intend to achieve comprehensive coverage of domestic residents’ holdings of nonresident securities, that is, primarily through an end-investor, custodian-based, or mixed custodian/end-investor survey. This issue is addressed in detail in chapter 2.

A. Compiling a Register

120. The sources of information on potential survey respondents are varied, and the work required to compile a register will depend on the extent to which a register already exists in the statistical agency. Box 1 provides guidance on how to compile a register, including the possible sources of information, based on the experience of the Australian Bureau of Statistics. In addition, national compilers should read paragraphs 853 to 862 of the IMF’s Balance of Payments Compilation Guide. Indeed, compilers are advised to consult the whole of chapter XVIII, beginning with page 187.

121. The next step, after the initial examination of the sources of information, is to produce a detailed list of potential survey respondents. The national compiler must be careful to select the “correct” population. To do so, the compiler should engage in some preliminary discussions with the largest institutional investors, such as pension funds, mutual funds, banks, insurance companies, etc., as well as the appropriate trade associations. The discussions should make these institutions aware of the national survey and help the national compiler to decide upon the design of the survey.

122. If national compilers decide to conduct an aggregate survey primarily targeted at end-investors, then they must decide whether to set a minimum threshold that excludes units with low-value investments in nonresident securities. For instance, the number of potential survey respondents identified in the review of sources may be very high, but in practice, a significant proportion of investment in nonresident securities may be undertaken by, or channeled through, a relatively small number of large investors or financial institutions. A minimum threshold may reduce the respondent burden without adversely affecting quality; if need be, the compiler might consider requiring reports from a sample of these “smaller investors.” However, if there is to be a minimum threshold, the national compiler must be careful not to exclude potentially important respondents.

123. If the national compiler decides to conduct a survey primarily targeted at custodians, then it is vital that the custodian understand the relationship between major investors in nonresident securities and custodians in order to avoid omission or duplication of data. This point is emphasized in chapter 2. Appendix VI provides a framework, based on the U.S. experience, for analyzing these relationships. One approach to this issue is to require all large investors to identify their domestic custodians, as well as to indicate any nonresident securities holdings they maintain with nonresident custodians. The relationship between end-investors and custodians could also be kept on file, but updating this could prove time-intensive.

124. Care is also needed in choosing the respondents to approach; an awareness of the operations, record-keeping, and accounting practices of the target businesses is required. The unit from which data are to be collected—that is, the statistical unit—should reflect the level within business structures at which portfolio investment position data are available and are appropriate, given the consolidated reporting obligations of business. Similar businesses will often have different internal arrangements, which necessitates special reporting arrangements (based perhaps on the degree of centralization or autonomy of related businesses). It may be necessary, therefore, to recognize reporting units inside the standard statistical unit. Again, it is recommended that national compilers consult the IMF Balance of Payments Compilation Guide, paragraph 849.

125. The treatment and capture of data from unincorporated entities needs particular care. Because these entities may not prepare full sets of accounts, their investment in nonresident securities on their own account or as an intermediary may be missed or duplicated in the collection.

126. The register will need to be maintained; otherwise, it can become out-of-date in respect of both the entities to be surveyed and the statistical unit to be approached. Media reports are a good and timely source of updates for significant businesses, but a review of the sources referred to in box 1 might be appropriate at discreet intervals, especially close to the time of dispatch of the survey forms.

Australia’s Experience in Compiling a Register: Practical Advice

The Australian Bureau of Statistics (ABS) has long experience in compiling and maintaining registers for statistical surveys. Listed below are some of their suggested sources of information:

  • Existing registers of businesses maintained by the statistical agency or other government agencies. The ABS maintains a central business register, and a separate organizational unit has particular responsibility for dealings with large businesses.

  • Existing business data collections already run by the statistical agency or other government data collection agencies. Information necessary for an outward portfolio investment register may be elicited from another survey, either by direct inspection of the other survey’s register or by adding one or two exploratory questions to that survey. A range of ABS surveys includes questions that can identify potential respondents to balance of payments surveys and vice versa.

  • Government administrative sources. Depending on local legislation and administrative arrangements or the authority of the collection agency, these sources might include:

    • taxation records, files, or lists;

    • information held by foreign investment approval or monitoring boards;

    • central bank records, such as prudential information and lists of entities coming under the central bank’s supervision (e.g., lists of registered banks and other deposit-accepting institutions);

    • information held by other regulatory authorities, such as lists of entities coming under their supervision (e.g., lists of securities brokers, investment managers, investment advisors, and authorized pension or mutual funds);

    • statutory company reports and company registration details; and

    • records held in foreign exchange control or international transaction reporting systems (e.g., records identifying the originators or recipients of large portfolio investment flows).

    • The primary government administrative source for updating units on the ABS register for international investment collection is taxation records. Other official and regulatory sources, many publicly available, include annual statutory accounts for public companies held by the Australian Securities Commission, submissions made to the Foreign Investment Review Board, the Insurance and Superannuation Commission’s annual and other reports, various material held by the Reserve Bank of Australia, and annual reports of other government bodies.

  • Publicly available databases, from which a wide variety of information is available. The information differs in completeness and accuracy and in the extent to which it is of use for a survey of investment in nonresident securities. These sources include the stock exchange register, possibly packaged by the stock exchange with additional information; commercial equity registries’ information services; international credit rating agencies’ publications (e.g., Moodys, Standard and Poors); and market research reports or services, such as reviews by accounting or brokerage firms. The ABS uses several Australian Stock Exchange products such as monthly updates of share issues listed on the exchange, and their prices and indices.

  • Media reports. Newspapers and periodicals are particularly useful sources for information on potential reporting entities. These sources may include listings of businesses and “league” tables, such as top-20 superannuation funds, and advertisements and other publicity material concerning services of individual companies.

  • Trade associations, and their associated reports and releases, can be a useful source. Apart from the public relations and liaison aspects of a close relationship between the statistical agency and trade associations, many either list publicly or can make available lists of members, often with indications of their importance or the range of services provided. Particularly in the financial sector, their members are also likely to be significant users of official statistics and thus have a vested interest in accurate data and assisting statistical or data collection agencies.

B. Details Stored on a Register

127. Ideally, any register should contain more than a simple list of names and addresses; it could also (1) include relevant information on each reporting entity, (2) control the mail-out and receipt of survey forms, and (3) provide information on the status of the response. A possible list of items that can be stored, based on the experience of Statistics Canada and the Bank of England, is furnished in box 2.

128. If compilers wish to computerize the register, it should save them time and effort and reduce the scope for error in dealing with survey respondents, when the survey is in operation. (See box 3 for information on computer databases.) However, if a computerized register is to operate efficiently, careful planning and careful maintenance are required; the importance of this cannot be underestimated. The type of issues and tasks that national compilers need to consider include:

  • taking account of the information flows to and from the database (the use of charts and diagrams is highly recommended in the planning phase);

  • taking account of the specifications for interrogations and reports to be generated;

  • devising a coding structure that embodies the defining characteristics of each respondent in its unique identification number. This is essential because it allows the sorting and analysis of respondents and the tracking of nonresponse;

  • ensuring that supporting hardware/software is sufficient for the task, for instance, that the memory and processing capabilities are such that response and retrieval times are acceptable;

  • allowing time for a thorough tryout of the system before “live” use;

  • backing up copies of data and software on a regular basis and storing them both on-site and at a remote location so that the files can be restored in the event of a system breakdown;

  • ensuring appropriate systems security and access authorization;

  • producing thorough documentation on the system; and

  • providing for a suitable filing system for associated papers, not least the completed

Information That Can Be Stored on a Computerized Register

Classification information

  • Respondent ID code Respondent name

  • Type of respondent (custodian, mutual fund, pension fund, etc.)

  • Respondent contact person

  • Address of respondent

  • Phone number of respondent

  • Facsimile number of respondent

  • Language (of survey form)

  • Mailing status (yes or no)

  • Type of media sent to the respondent (survey form, diskette, letter, or other)

  • Flags to alert for special cases to be handled separately from the automated system

Response log details

  • Response status (mailed, received, in contact, re-mail, exempt, removed, etc.)

  • Type of media used by the respondent (survey form, tape, diskette, printout)

  • Type of record layout provided by the respondent (aggregate or detailed data)

  • Date mailed

  • Date re-mailed

  • Date received

  • Date of first follow-up

  • Date of second follow-up

  • Date removed

Some useful advice

At the planning stage, it is important to consider which fields will be automatically filled by the computerized system. For example, would the “date mailed” field be updated directly by the mailing program? Provide sufficient space for addresses, etc.; it may be appropriate to subdivide fields for some items (for example, distinguishing the postal code from the remainder of the address). Take care when assigning default values to fields and (as a safeguard against inputting errors) have an accessible, on-line, separate file that lists those types of input that are currently acceptable for a specified field, so that unacceptable inputs will be rejected, for instance, entering a letter in a field that can “accept” only numbers. It is also useful to have a comment area for each entry.

C. Use of the Register

129. Once the national survey is under way, the benefits of an efficient computerized register become apparent. The benefits accrue both at the initial stage of sending out survey forms and at the follow-up stage and beyond. Some of these benefits are presented ahead to provide national compilers with some idea of the capabilities of a fully computerized register.

130. At the initial stage, compilers need to print and dispatch the survey forms and letters. To do so, they can generate the mailing labels from the computerized register. At the same time, a record can be written noting which survey respondents will be sent a questionnaire (e.g., mail status to “yes”). Compilers can also perform a quality check to ensure that the right respondent is receiving the right survey form(s). This is particularly important if the mailing includes more than one type of survey form. It is very useful to include with the survey form a postcard (or use some similar technique) that respondents use to acknowledge receipt of the questionnaire and identify the person to contact. In this way, compilers can quickly identify problems and initiate follow-up action.23 The national compiler should note, in the response log, those entities that have returned the postcard.

131. National compilers should record the return of the completed survey form in the response log, along with the date of receipt; any changes required to the register, for instance, name, address, etc., could be made. Compilers could run a report to verify that the correct entries have been made. Thereafter, they could distribute survey forms to the appropriate person for data capture and editing.

132. Respondents may contact the compiler for a number of reasons. The compiler should keep a record of each phone call and/or correspondence either in a manual file or as a note against the appropriate record in the response log file. If a survey respondent requires more time to complete the survey form, the compiler should note this information so that reminders are not sent. In such a case, the response log status is changed to indicate “in contact,” and follow-up procedures are suspended for a specified period. When new copies of the survey forms are requested, a re-mail is initiated, and additional forms are sent to the respondent with the follow-up procedures kept in place. The compiler must update the register if updated information is provided and run a check to confirm that correct details have been stored.

133. When the closing date for the return of completed survey forms has passed, the national compiler can select the overdue survey respondents from the response log, based on the response status of “outstanding” and the mailing date, and prepare labels for envelopes and follow-up documents.

134. A number of reports can be produced on a regular basis to assess the status of the survey:

  • transaction reports: lists of changes sorted by name, ID code, date, etc.

  • response log reports: summary counts of survey forms mailed, received, deleted, and percentage outstanding; response log listing all survey respondents, survey status sorted by name, ID code, etc.

V. Choosing/Developing a Computer Package to Process the Survey Results

135. Choosing the appropriate computer package is important and needs to be carefully considered by national compilers. This section is intended to provide some guidance on how to make this decision.

136. The most straightforward approach is to choose the computer package that is already standard in one’s own statistical agency. This approach has a number of advantages: staff are already trained how to use the package, the capabilities of the package are known, and computer support is presumably available if any technical difficulties arise. In addition, only limited time and effort need be spent on deciding upon the appropriate package. However, if the survey is a new undertaking, it is worthwhile to consider whether the existing standard package can meet the processing requirements of the survey.

137. There are many ways to store information. The volume of data and whether the survey is to be repeated regularly could determine the selection. On one hand, a small aggregate survey could be handled by a commercial spreadsheet, whereas a large one-time and detailed survey could use a relational database. On the other hand, if the survey is to be conducted regularly and reasonably frequently, the data might need to be held in time series form and therefore require a different type of database. Box 3 provides some examples of commercial databases in existence at year-end 1995. This list is provided for information purposes only; the Task Force makes no recommendations. Any compilers who approach any commercial database vendors will need to make their own judgment as to whether the product meets their needs.

Types of Databases as at Year-End 1995

article image

A. Relational Databases

138. Relational databases store data in a set of linked two-dimensional tables; within a table, each column represents a distinct attribute, and each row corresponds to a distinct set of observations of the attributes. The idea is to hold the minimum amount of duplicate data: instead of repeating the same data in a table, duplicate data will be placed in a separate table linked to the first. Box 4 defines and exemplifies relational databases.

139. On one hand, a large relational database management system (RDMS) is commendable for processing surveys: it can handle massive amounts of information, have the capacity to operate on many platforms (e.g., DOS, OS2, UNIX), and serve many clients at the same time. Most large RDMSs provide libraries, which, for example, allow the compiler to develop an array of common routines and procedures. On the other hand, depending on the volume of data, the use of a personal relational database (PRD) might be sufficient to process, analyze, and generate the survey output for publication purposes.

140. The RDMSs provide better performance when holding large amounts of data, tend to have better “roll-back” facilities to safeguard against loss of data following system crashes, and have more sophisticated security features. However, the performance gap between PRDs and RDMSs is narrowing. Indeed, PRDs and RDMSs tend to be used in parallel, with the PRD forming the “front-end” to the RDMS. Data are transferred between the two using a “Structured Query Language.”

Relational Databases

Formally, a relational database is a collection of “relations,” whereby a relation is a two-dimensional table in which the entries in the table are single-valued; each column has a distinct name (called an attribute name); all the values in a column are values of the same attribute (namely, the attribute identified by the column name); the order of the columns is immaterial; each row is distinct; and the order of the rows is immaterial.

The following table illustrates a relational database, wherein the middle “block” represents the higher-order database; that is, information from the upper and lower “blocks” feeds into the middle “block.”

article image

B. Time-Series Databases

141. A one-time survey fits the relational database well. However, if the survey is to be repeated regularly, the national compiler would need a system that stores time series data. Relational databases cannot store time series efficiently. Nonetheless, data can be transferred from a relational database to a time-series database.

142. Time series (or temporal) database management systems are “time intelligent”: they incorporate routines that “understand” time. For example, they can turn data on a monthly frequency into data on a quarterly frequency, seasonally adjust data, etc. The choice of a commercial time-series database is extremely limited and often has to be created in-house for the needs of the client.

VI. Quality Control

143. The importance of quality control cannot be underestimated. If, despite all the preparations, survey respondents submit poor quality data, then the value of the whole exercise is undermined.

144. All experience suggests that national compilers can expect survey respondents to make mistakes. Those compilers conducting a national survey for the first time need to be especially vigilant in checking data supplied; the more experience the respondent has in completing the survey form, the less likely that significant error will be made. Nevertheless, even the most experienced of respondents can make mistakes.

145. National compilers can conduct quality control checks on a number of levels in a number of ways. The compilers can include checks in the survey form, cross-check survey data against other reported data, and devise analytical checks. They should also be able to check data received from the domestic custodians and/or domestic end-investors at a detailed or at an aggregated level.

146. This section provides some guidance as to the range of possible checks. Nonetheless, it should be borne in mind that the more the survey form fits the domestic circumstances, and the more that survey respondents are consulted about what is required of them, then, inter alia, the greater the probability of receiving good quality data, and, perhaps just as important, the greater the likelihood of cooperation, if the national compiler needs to question data supplied by the respondent.

147. As comparable data are to be exchanged between participating countries, national compilers will receive data on their residents’ securitized liabilities to nonresidents. Some broad checks on the data received—either by individual counterpart country or on a global basis (i.e., total liabilities to nonresidents)—should be possible. The following subsections focus on the various checks.

A. Quality Control Checks Through the Survey Form

148. The sooner errors are spotted and corrected, the better. For this reason, it is recommended that national compilers consider devising a survey form that explicitly includes quality control checks and/or requires extra information, which can be used as a consistency check. However, if extra information is required, it should be kept to the minimum necessary, and the national compiler should be clear as to the purpose for its collection.

Security-by-security survey forms

149. The United States found that, in its security-by-security collection from custodians, respondents can make a number of errors. These include (1) failure to differentiate between long- and short-term securities and between domestic and nonresident securities, (2) incorrect currency conversion of foreign currency securities into domestic currency, (3) use of incorrect prices to arrive at market valuation, (4) reporting of position data corresponding to a date other than the survey date, and (5) problems relating to the reporting of asset-backed securities (see box 2 in chapter 3).

150. There are a number of additional pieces of information that can be requested on a security-by-security survey form to help address such reporting issues. They include:

  • the security number: With the help of a security database, the security number can help the national compiler distinguish a domestic from a nonresident security and a long- from a short-term security and denote the currency of the security.

  • the quantity of securities held: This information can allow the national compiler to derive the implicit market value of each individual security holding.

  • the face or nominal value of the security: This again is a check on the implicit price valuation in the report and may highlight securities for which survey respondents are unable to provide market prices.

Aggregate survey forms

151. On an aggregate survey form, a number of checks are possible. In the Australian system, as positions and transactions data are gathered on the same survey form, the reconciliation is done directly by the reporter. (More details are provided in box 5). But this is a system where collection of position data is ongoing. On the other side of the coin, the national compiler of a first-time national survey might consider requesting that survey respondents provide the value of total security assets held or simply total assets held, against which the reported nonresident holdings could be compared. This would help identify severe misreporting, specifically, reporting all security assets as nonresident.

Australia’s Experience with Quality Control Through the Reporting Form

In Australia, the foreign investment reporting forms are structured so that there is a full reconciliation, for each item, between the opening and closing levels of investment, and transactions during the period. An example, for equity instruments, is shown below. Respondents are also asked to specify the reasons behind the data in an “other factors” column in a separate comment box on the form. In the Australian experience, this approach both educates respondents about the relationships between individual data items and forces them to consider the consistency of the data reported.

Equity Investment Abroad

article image

The ABS has found that full data on transactions and other reasons for changes in stocks are usually available when survey respondents provide data on their own accounts or client activity—for example, pension funds investing and managing their own assets, investment (fund) managers managing assets on behalf of other entities, and trading entities managing their own portfolios. These entities will collect all relevant stocks and transactions data at market prices.

Within the ABS, individual analysts are responsible for confirming the reported data—either by form type or institution type. They produce editorial notes that identify and explain all large movements at the aggregate level by reference to the entities contributing significantly to those movements. The computer system has already edited and checked the arithmetic and compared large changes in levels with the “reconciliation” data at the individual respondent level. All large amounts (approximately A$100 million or more), reported in the transactions, exchange rate variations, and “other factors” boxes, are validated with respondents.

Independent sources—for instance, published price indices or exchange rate movements over the period—are also used to judge whether the reported data are accurate. For example, if a 20 percent change in the value of a U.K. asset in Australian dollar terms was explained by a negative entry in the “exchange rate variations” column—mplying a decline in the value of the U.K. pound relative to the Australian dollar—and it was known that the actual bilateral rate had not moved in that direction or by that approximate magnitude over the period, then the ABS would question the respondent. Information from share price indices may prove a useful check on entries in the “other factors” box, for equity.

Anecdotal evidence, such as that derived from market or media comment or contact with other data providers, is also used to confirm data. For example, if there is evidence that Australian enterprises in general were selling securities in a specific market but that a particular respondent reported a large increase in assets in that market, owing to positive net transactions, the respondent would be questioned. Comparisons might also be made with the general magnitude, type, and direction of data reported by similar entities to see if they were behaving similarly and providing consistent explanations for movements.

Australia has good experience with checks of this type. Although the basis for estimating exchange rate effects differs among individual enterprises, reported valuation effects are generally in line with independently sourced market information.

152. It is recommended that simple computer-checking procedures be written to process reported aggregate data. For instance, a computer check could be written that sums the individual country data and compares it with the reported total holdings; the difference should be zero. Likewise, a check could be written that highlights zeros or data above a certain size, so that any unusual figures can immediately be brought to the national compilers’ attention. There are many other similar routine checks that can be devised.

153. More generally, the national compiler could require an official of the survey respondent to certify that the information provided is complete and accurate; this could help ensure the data quality and punctuality. Similarly, requesting the name of a contact person helps ensure that follow-up enquiries are dealt with efficiently.

B. Quality Control Checks Against Other Reported Data

154. Different possibilities exist for checking data against other reported data—especially for assets of financial intermediaries like banks or investment companies—both at the level of the individual reporter and the aggregated level. These financial intermediaries might separately report statistics on portfolio investment position data for supervisory and/or statistical requirements. To give some examples:

Central bank (monetary authorities)

155. Position data on investment in nonresident securities might be available from the central bank’s balance sheet and/or separate accounts, but there will almost certainly be confidentiality restrictions on the availability and use of these data. Indeed, as reserve assets are a separate component from portfolio investment in the International Investment Position, national compilers, particularly if conducting a custodian survey, need to be clear in their own minds as to whether they require custodians to report securities held as reserve assets or not (see also the footnote to paragraph 25).


156. Position data on investment in nonresident securities are included in the banking statistics and balance sheets. Furthermore, many reporting central banks provide the Bank for International Settlements (BIS) with information on their commercial banks’ investment in nonresident securities, including a breakdown by country of issuer and by major currency.

Insurance companies and pension funds

157. Position data on investment in nonresident securities should be included in their balance sheets.

Investment companies

158. Position data on investment in nonresident securities should be included in their balance sheets; in addition, the geographical allocation of the individual investment funds can be estimated through knowledge of their published investment strategy.

Nonfinancial economic sectors (for instance, companies or households)

159. Position data on investment in nonresident securities could be included in corporate balance sheets, but it might be difficult to confirm the data for nonfinancial sectors.

160. National compilers should be aware that the above approach requires collecting information on investment in nonresident securities by domestic sector, which is not a mandatory requirement of the Coordinated Survey. However, for those countries where there are no balance of payments transactions data (thus, the range of analytical checks that can be conducted is limited [see below]), attribution of investments by sector and a comparison with available sector data, as outlined above, could probably be the best check that can be made.

161. Another type of check is to compare respondents’ survey data by industrial classification of the respondents. This helps identify anomalies among reporters with similar activities. In other words, each respondent’s survey data could be compared against the survey data reported by the whole of their peer group. However, this check is based on the assumption that entities in the same industrial classification will act in a broadly similar way and thus is probably most applicable at the level of total nonresident securities owned.

C. Quality Control Through Analytical Checks

162. The degree to which analytical checks can be developed depends on the availability of comparable data. If data are available, the following checks can be devised:

  • If stock data and flow data are independently assembled, then an attempt should be made to reconcile these data. To do so requires consideration of effects caused by different prices, exchange rates, other adjustments like write-offs, or thresholds. The method by which this type of analytical check can be developed is focused on in appendix VIII; the check can be applied at the individual respondent and aggregate data levels.

  • In countries where the position data will be produced for the first time for a number of years, but transactions data are available, an attempt could be made at reconciling position data, estimated by accumulating transaction data with reported position data. The method of calculating position data from transactions data is illuminated in paragraphs 740 to 743 of the Balance of Payments Compilation Guide. The degree of deviation of the cumulated transactions and reported position data could depend on the composition of the holdings, the variability of the relevant exchange rates and market prices of securities, and the length of time over which transactions have been cumulated. However, if the national compiler judges the discrepancy as being significant, it should be investigated. Given the number of assumptions and potential timeframe of observations, this check is probably more appropriate for aggregate data, although it could be developed for checking individual reporters’ data. The more frequent the surveys of positions, the more reliable the reconciliation.

163. One important piece of information required to develop these analytical checks is the currency composition of the portfolio assets, without which the currency and security price revaluations are, at best, an estimate. Therefore, the national compiler might ask survey respondents to provide a breakdown of investments by currency—although this is not a mandatory requirement of the Coordinated Survey. As a second best option, the national compiler might use data on the currency composition of holdings provided by different financial intermediaries (e.g., banks) as a proxy for the currency composition of all survey respondents’ holdings.

164. Some compilers will face problems, particularly when checking data for claims vis-à-vis individual countries, if their transactions data are based on the “transactor” principle, as opposed to the debtor/creditor principle used for position data (see BPM5 paragraphs 484 to 488). In other words, it might not be possible to reconcile cumulated transactions data with the position data from the national survey because different principles of geographic allocation are being used.

D. Quality Control from the Viewpoint of the Recipient (Debtor) Country

165. Because comparable data are to be exchanged between participating countries, national compilers shall receive data on their residents’ securitized liabilities to nonresidents. While quality control is primarily the responsibility of the national compiler in the creditor country, the recipient compiler could be in the position to check the data received. Checks could be carried out on data vis-à-vis a single counterpart (creditor) country and/or on data vis-à-vis a “group of reporting countries.”

166. Regarding individual counterpart countries, the recipient compiler (debtor country) could check the received data by:

  • comparing the data with that previously published. At present, several countries (e.g., the Netherlands) publish data on their investment in nonresident securities, which can be used as an approximated range for the position data at end-December 1997;

  • using information about interest payments vis-à-vis single counterpart countries. The country attribution of the outstanding volume of domestic securities could be estimated. However, care is needed with this check, because the residency of recipients of interest payments on bearer securities may itself be estimated; and

  • using data published in the BIS statistics on banks’ investments in nonresident securities. These data give a partial picture of nonresident investment in domestic securities. If information is available on the banks’ percentage share of total holdings of nonresident securities in the creditor economies, then from the partial BIS data, some estimate of the country attribution of the nonresident investment in domestic securities could be made.

167. The recipient compiler should be aware that each of the aforementioned estimation methods is only a broad check. Nonetheless, these estimates would provide the recipient compiler with a benchmark against which to judge the data received. For instance, Austria has calculated that, at the end of 1994, approximately 55 to 65 percent of the outstanding volume of domestic securities are held by nonresident investors within the European Union member states. This estimate is based on a mixture of the estimation methods mentioned above.

168. It is also possible to devise checks on the aggregate data received:

  • Nonresident investment in domestic securities could be estimated by residual, that is, the outstanding volume of equity and long-term debt securities issued by residents, adjusted for residents’ investments and compared against the aggregate data received. Data on the outstanding volume of domestic securities issued could be available from domestic or international publications (see appendix VII). Residents’ holdings of resident securities may be published by the domestic statistical agency or, at least, be available for the banking sector from published banking statistics.

  • The analytical check of comparing cumulated transactions data with the reported holdings data (see paragraph 162 above) could also be developed for liabilities data.