How BEA Aligns and Augments Source Data from the U.S. Treasury Department for Inclusion in the International Transactions Accounts

Like most of the U.S. economic accounts produced by the Bureau of Economic Analysis (BEA), the statistics on financial-account transactions in the International Transactions Accounts (ITAs) are based largely on source data collected by other federal government agencies—in this case, by the Treasury International Capital (TIC) reporting system of the U.S. Department of the Treasury. BEA makes adjustments to align the data with balance-of-payments concepts and to close gaps in coverage in preparing statistics for the financial account. This report explains these adjustments to help data users reconcile BEA financial-account statistics with the TIC data available to the public on the Treasury Department's TIC website.

The relationships between the statistics in the ITAs and the data from the TIC reporting system are shown in tables 1 and 2, which identify the adjustments that BEA makes to the TIC source data. Table 1 presents statistics on transactions in portfolio investment assets and liabilities (equity and debt securities). Table 2 presents statistics on transactions in other investment assets and liabilities, including currency, deposits, loans, and trade credit and advances.

Aligning with balance-of-payments concepts

Holdings of U.S. assets and liabilities reported in the TIC system are the basis of BEA statistics on portfolio investment and other investment assets and liabilities. To impute balance-of-payments transactions from the reported holdings, BEA removes from the total quarterly change in holdings the quarterly changes in holdings that do not result from transactions. As explained in greater detail in U.S. International Economic Accounts: Concepts and Methods, BEA removes quarterly changes in holdings due to (1) changes in prices, (2) changes in exchange rates, and (3) changes in volume and value not included elsewhere (table 1, lines 5–7, 16–18, and 27–29, and table 2, lines 7, 8, 18, and 19).

BEA also aligns the TIC data with balance-of-payments concepts by removing changes in holdings that are already counted in other data sources for direct investment and reserve assets. For example, TIC balances that are reported by U.S. banks and securities brokers (table 2) also include claims on, and liabilities to, unincorporated branches by parent companies that are included in BEA direct investment surveys as direct investment equity. Changes in balances covered in BEA direct investment surveys are removed (table 2, lines 4 and 16). Foreign securities held as U.S. reserve assets are reported in TIC surveys of U.S. holdings of foreign securities with portfolio investment; changes in these reserve holdings are removed from portfolio investment (table 1, line 4).

In addition to removing changes in claims and liabilities that should be excluded from portfolio investment or other investment, BEA also separates transactions in short-term securities and negotiable certificates of deposit of any maturity from other investment and records them in portfolio investment (table 1, lines 9 and 20, and table 2, lines 6 and 17). The holdings of these types of portfolio investment are collected in the TIC system with other investment instruments, such as loans and deposits.