Flow of Funds - Overview of Japan, the United States, and the Euro Area

Flow of Funds - Overview of Japan, the United States, and the Euro area -

August 20, 2021 Research and Statistics Department Bank of Japan

*In this paper, major sectors are compared either among Japan, the United States, and the Euro area or between Japan and the United States. Ⅰ . Overview: Japan, the United States, and the Euro area — Data are as of end-March 2021. Chart 1. Financial assets and liabilities of financial institutions Japan Assets ( 3,980trillion yen ) Liabilities ( 3,845trillion yen )

Equity 1% Currency and deposits 17% Borrowings 10% Equity 1%

Depository corporations Others 6% Loans Currency and 22% deposits 42% Others 3% ( 2,226 trillion yen ) ( 2,183 trillion yen )

Debt Investment trusts Debt 2% securities 8% Currency and deposits 1% Borrowings 1% securities 1% Insurance, pension Debt Insurance and Pension funds securities and standardized guarantees 8% 14% ( 693 trillion yen ) Others 5% ( 604 trillion yen )

Investment Loans Equity 1% Equity 1% trusts 1% 1% Deposits with Investment trusts Currency and deposits 2% the Fiscal Loan Fund 1% 7%

Other financial institutions Others 5% Loans 15% ( 1,061 trillion yen ) Others 2% ( 1,058 trillion yen )

Equity 4% Debt Borrowings Debt Equity 3% securities 1% 8% securities 75 50 25 07% 25 50 75 Percentage ratio to the total financial assets or liabilities of the financial institutions United States Assets ( 117.1 trillion dollars ) Liabilities ( 115.0 trillion dollars )

Currency and deposits 3% Borrowings 1% Others 1% Others 1% Depository corporations Loans Currency and 11% deposits 17% ( 24.2 trillion dollars ) ( 25.2 trillion dollars ) Debt Equity 3% securities Loans Equity 7% 5% 1% Others 4% Others 4% Debt Insurance, pension Insurance and Pension funds securities and standardized guarantees 9% 28% ( 38.1 trillion dollars ) ( 37.0 trillion dollars ) Insurance, pension and Investment trusts standardized guarantees 5% 6% Currency and deposits 1% Borrowings 3% Others 2% Debt Equity Loans Investment trusts securities Other financial institutions 20% 13% 27% 13% ( 54.8 trillion dollars ) ( 52.7 trillion dollars ) Debt Equity 2% securities 10% 75 50 25 0 25 50 75 Percentage ratio to the total financial assets or liabilities of the financial institutions Euro area Assets ( 80.9 trillion euro) Liabilities ( 80.0 trillion euro) Investment trusts Equity 2% Currency and deposits 14% 2% Others 1% Others 1% Loans Currency and Depository corporations 18% deposits 31% ( 33.3 trillion euro) ( 32.7 trillion euro) Debt Debt Currency and deposits Equity 2% 1% securities 5% securities 6% Investment trusts Equity 1% 5% Insurance, pension Equity 2% Insurance and Pension funds and standardized guarantees 12% ( 11.7 trillion euro) ( 11.7 trillion euro) Debt Loans Borrowings 1% securities 5% 1% Debt Others 2% Currency and deposits 3% securities 5% Others 1%

Equity Loans Equity Other financial institutions 21% 7% 14% ( 36.0 trillion euro) ( 35.6 trillion euro) Investment trusts Debt Borrowings 7% Investment trusts 4% securities 8% 18% 75 50 25 0 25 50 75 Percentage ratio to the total financial assets or liabilities of the financial institutions

* "Other financial institutions" for Japan are the sum of "Securities investment trusts," "Other financial intermediaries," "Financial auxiliaries," and "Public captive financial institutions." ** "Others" is the residual which is the remaining after deducting "Currency and deposits," "Deposits with the Fiscal Loan Fund"(Japan only), "Loans/Borrowings," "Debt securities," "Investment trusts," "Equity," and "Insurance, pension and standardized guarantees" from total financial assets/liabilities. *** "Currency and deposits" held by "Depository corporations" for US includes "Vault cash" and "Reserves at Federal Reserve."

1 Chart 2. Financial assets held by households

Debt securities (1.4%)

Insurance, pension and Currency and deposits Equity Japan standardized guarantees ( 1,946 trillion yen ) (54.3%) (10.0%) (27.4%)

Investment trusts Others (2.7%) (13.2%) Investment trusts Debt securities (4.3%) (4.2%)

Insurance, pension and Equity United States standardized guarantees ( 109.6 trillion dollars ) (37.8%) (29.0%)

Others (2.5%) Currency and deposits (13.3%)

Insurance, pension and Currency and deposits Equity Euro area standardized guarantees ( 27.6 trillion euro) (34.3%) (18.2%) (33.8%)

Debt securities Investment trusts Others (2.3%) (1.8%) (9.6%) 0 102030405060708090100

Percentage ratio to the total financial assets

* "Others" is the residual which is the remaining after deducting "Currency and deposits," "Debt securities," "Investment trusts," "Equity," and "Insurance, pension and standardized guarantees" from total financial assets. Chart 3. Financial liabilities owed by private nonfinancial corporations

Debt securities (4.4%)

Others Japan Borrowings (24.6%) Equity (54.9%) (16.1%) ( 1,862 trillion yen )

Debt Others United States securities Equity (68.8%) ( 79.2 trillion dollars ) (9.3%) (17.0%)

Borrowings (4.9%)

Others Euro area Borrowings (27.4%) Equity (55.5%) ( 41.6 trillion euro) (12.9%)

Debt securities (4.1%)

0 102030405060708090100

Percentage ratio to the total financial liabilities

* "Others" is the residual which is the remaining after deducting "Borrowings," "Debt securities," and "Equity" from total financial liabilities. ** Figures for the Euro area consist of nonfinancial corporations, which include both public and private nonfinancial corporations.

2 Chart 4. Financial surplus and deficit of major sectors (as a percentage of nominal GDP) Japan (%) 20 (Financial surplus) Private nonfinancial corporations 15 General government Households 10 Rest of the world

-5

-10

-15 (Financial deficit) -20 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Fiscal year United States (%) 20 (Financial surplus) 15

-5

-10 Private nonfinancial corporations General government -15 Households (Financial deficit) Rest of the world -20 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Fiscal year Euro area (%) 20 (Financial surplus) 15

-5 Nonfinancial corporations -10 General government -15 Households (Financial deficit) Rest of the world -20 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Fiscal year

* See notes on the last page for the definition of each sector.

3 Ⅱ . Overview: Japan and the United States — Data are as of end-March 2021. Chart 5. Financial assets held by investment trusts

Currency and deposits (2.9%)

Debt Equity Outward investment in securities Others Japan securities ( 279.5 trillion yen) (12.8%) (29.7%) (38.1%) (6.3%)

Loans Investment trusts (5.2%) (5.0%) Currency and deposits (0.4%)

Debt Equity United States securities ( 31.0 trillion dollars ) (61.1%) (32.6%)

Loans (4.1%) Others (1.7%) 0 102030405060708090100 Percentage ratio to the total financial assets

* "Others" is the residual which is the remaining after deducting "Currency and deposits," "Loans," "Debt securities," "Investment trusts," "Equity," and "Outward investment in securities"(Japan only) from total financial assets. ** Data for US include both outward and domestic investment in securities. Chart 6. Financial assets held by pension funds

Currency and deposits (7.3%)

Debt securities Equity Outward investment Others Japan (24.1%) (8.8%) in securities (28.5%) (9.5%) ( 163.2 trillion yen)

Loans Investment trusts Claims of (4.6%) (9.5%) pension funds on pension managers Currency and deposits (0.3%) (7.8%)

Claims of Debt securities Investment trusts Equity pension funds on Others United States ( 26.0 trillion dollars ) (19.4%) (20.6%) (26.7%) pension managers (10.6%) (22.2%)

Loans (0.2%) 0 102030405060708090100 Percentage ratio to the total financial assets

* "Others" is the residual which is the remaining after deducting "Currency and deposits," "Loans," "Debt securities," "Investment trusts," "Equity," "Outward investment in securities"(Japan only), and "Claims of pension funds on pension managers" from total financial assets. ** Data for US include both outward and domestic investment in securities. Chart 7. Financial assets held by insurance

Currency and deposits (3.6%) Equity (6.0%)

Outward investment Debt securities Loans in securities ( 529.6 trillion yen) Japan (51.9%) (7.1%) (20.2%)

Investment trusts Others (3.5%) (7.7%) Currency and deposits (1.5%)

Debt securities Investment trusts Equity United States Loans Others ( 12.1 trillion dollars ) (7.0%) (45.1%) (15.4%) (10.7%) (20.3%)

0 102030405060708090100

Percentage ratio to the total financial assets

4 Notes to Charts 1 to 7 Data source Bank of Japan, Flow of Funds Accounts, released on June 25, 2021 https://www.boj.or.jp/en/statistics/sj/index.htm/ FRB, Financial Accounts of the United States, First Quarter 2021, released on June 10, 2021 https://www.federalreserve.gov/releases/z1/ ECB, Euro Area Accounts, released on July 28, 2021 https://www.ecb.europa.eu/stats/macroeconomic_and_sectoral/sector_accounts/html/index.en.htm Sectors and transaction items Sectors and transaction items of the United States [hereafter "US"] and Euro area [hereafter "EA"] are reclassified according to the Japan's Flow of Funds Accounts (see below). Sectors Depository corporations [US] U.S.-Chartered Depository Institutions, Foreign Banking Offices in U.S., Banks in U.S.-Affiliated Areas, Credit Unions [EA] Monetary Financial Institutions other than Central Bank ：Includes MMF Insurance and pension funds (Sectors marked with an asterisk indicate pension funds) [US] Life Insurance Companies, Property-Casualty Insurance Companies, Private Pension Funds*, State and Local Government Employee Retirement Funds*, Federal Government Employee Retirement Funds* [EA] Insurance Corporations and Pension Funds Other financial institutions (Sectors with an asterisk indicate investment trusts. Sectors with double asterisks indicate nonbanks) [US] Money Market Funds*, Mutual Funds*, Closed-End Funds*, Exchange-Traded Funds*, Government-Sponsored Enterprises, Agency- and GSE-Backed Mortgage Pools**, Issuers of Asset-Backed Securities**, Finance Companies**, Real Estate Investment Trusts, Security Brokers and Dealers, Holding Companies, Other Financial Business [EA] Investment Funds (except MMFs), Other Financial Institutions Private nonfinancial corporations [US] Nonfinancial Corporate Business [EA] Non-Financial Corporations : Includes both private and public nonfinancial corporations. General government [US] State and Local Governments, Federal Government :Social security funds not included. [EA] General Government : Includes social security funds. Households [US] Households and Nonprofit Organizations [EA] Households and Non-Profit Institutions Serving Households - In Japan's Flow of Funds Accounts, households excludes private nonprofit institutions serving households. Transaction items Currency and deposits [US] U.S. Deposits in Foreign Countries, Checkable Deposits and Currency, Time and Savings Deposits [EA] Currency and Deposits Loans/Borrowings [US] Net Interbank Transactions, Federal Funds and Security Repurchase Agreements, Loans [EA] Loans Debt securities [US] Debt Securities [EA] Short-Term Debt Securities, Long-Term Debt Securities Investment trusts [US] Money Market Fund Shares, Mutual Fund Shares, Total Shares Issued by Closed-End Funds and Exchange-Traded Funds (included in the liabilities side) [EA] Investment Fund Shares (including MMF Shares) Equity [US] Corporate Equities, Proprietors' Equity in Noncorporate Business, Investment by Parent Companies, Foreign Direct Investment: Equity, Equity in Federal Reserve Facilities, etc. [EA] Listed Shares, Unlisted Shares and Other Equity Insurance, pension and standardized guarantees [US] Life Insurance Reserves, Pension Entitlements (including Claims of Pension Fund on Sponsor) [EA] Insurance and Pension Schemes Claims of pension funds on pension managers [US] Claims of Pension Fund on Sponsor Financial surplus and deficit [US] Net Lending (+) or Net Borrowing (-) (Financial Account) [EA] Net Financial Transactions Note Some items with small amount outstanding are not explicitly shown on charts.