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International Financial Management

International Financial Management. Chapter 2 The Balance of Payments De. Chisheng Hsu Tunghai Univeristy. Fundamentals of BOP Accounting. 「國際收支表」 (Balance of Payments) 定義： 一國居民與其他國家居民在一定期間內所進行的經濟交易的記錄表。. 居民. 在某個國家居住超過一年，即為該國居民。 居民包括個人、企業、非營利團體與政府。 外國企業在本國子公司 ( 分行 ) 視為本國居民。.

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International Financial Management

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  1. International Financial Management Chapter 2 The Balance of Payments De. Chisheng Hsu Tunghai Univeristy

  2. Fundamentals of BOP Accounting • 「國際收支表」(Balance of Payments) 定義： • 一國居民與其他國家居民在一定期間內所進行的經濟交易的記錄表。

  3. 居民 • 在某個國家居住超過一年，即為該國居民。 • 居民包括個人、企業、非營利團體與政府。 • 外國企業在本國子公司(分行)視為本國居民。

  4. Statistics Canada: A User Guide to the Canadian System of National Accounts • Persons are considered residents when their stay in Canada is for a period of one year or more. • This definition excludes visitors, seasonal workers, commuter workers, crew members of ships, aircraft, etc., who do not live in Canada and are here for less than a year. • Canadian citizens residing abroad for a period longer than a year are regarded as nonresidents. • Special status is accorded to government personnel and staff members of international organizations - Canadian government employees stationed abroad are considered residents of Canada no matter how long their overseas posting, while employees of foreign governments posted to Canada are not regarded as residents. • http://www.statcan.gc.ca/nea-cen/pub/guide/chap6i-eng.htm

  5. Bank of Japan: Explanation of "Balance of Payments Statistics" • The concept of residence does not reflect nationality or legal criteria, but is based on a transactor's center of economic interest. • Concepts of residency in Japan's BOP statistics are defined as follows: • A 'resident' shall mean a natural person having his place of domicile or residence in Japan, or a juridical person having its main office in Japan. A branch, agency or other office in Japan of a nonresident, irrespective of whether it is legally authorized to represent its principal or not, shall be deemed to be a resident, even if its main office is in a foreign country. • http://www.boj.or.jp/en/type/exp/stat/exbs02.htm

  6. The Accounts of the BOP • 經常帳（current account） • 資本帳（capital account） • 金融帳（financial account） • 統計誤差與遺漏（statistic errors and omissions） • 官方準備帳（official reserve transaction） The BOP mustbalance.

  7. Current Account (經常帳) • The Current Account includes all international economic transactions within one year, the current period. • Goods trade (exports and imports) 商品進口與出口 • Services trade (exports and imports) 服務收入與支出 • Income 所得收入與支出(dividend and interest) • Current transfers 經常移轉收入與支出(foreign aid, gifts) • The Current Account is typically dominated by the first component which is known as the Balance of Trade (BOT) even though it excludes service trade

  8. Capital Account (資本帳) • 1. Capital Transfers (資本移轉) related to the purchase and sale of fixed assets such as real estate. • 2. Acquisition and disposal of nonproduced/nonfinancial assets. (非生產性、非金融性資產的取得與處分)：商譽與專利權的取得與處分

  9. Financial Account (金融帳) • The Financial Account consists of three components; • Direct Investment(直接投資) – in which the investor exerts some explicit degree of control over the assets • Portfolio Investment(證券投資) – in which the investor has no control over the assets (股票與債券) • Other Investment (其他投資)– consists of various short-term and long-term trade credits, cross-border loans, currency deposits, bank deposits and other A/R and A/P related to cross-border trade

  10. Direct Investment • Foreign direct investment arises from 10% ownership of voting shares in a domestic firm by foreign investors. • The source of concern over foreign investment in any country focuses on two topics: control and profit. • Some countries possess restrictions on foreigners may own in their country. • The general rule or premise is that domestic land, assets and industry should be owned by residents of the country. • Concerns over profit stem from the same argument.

  11. Portfolio Investment • This is the net balance of capital that flows in and out of the U.S. but does not reach the 10% threshold of direct investment. • The purchase of debt securities across borders is classified as portfolio investment because debt securities by definition do not provide the buyer with ownership or control. • Portfolio investment is motivated by a search for returns rather than to control or manage the investment.

  12. Net Errors and Omissions 誤差與遺漏淨額 • The Net Errors and Omissions account reflects errors and omissions in collecting data on international transactions. • A positive figure reflects a mysterious inflow of funds, and a negative amount reflects an outflow. • Typically, this figure for the U.S. is positive. • The Net Errors and Omissions account ensures that the BOP actually balances.

  13. 官方準備帳 (1) • Overall balance全面性餘額 (or official settlement balance官方清算餘額): sum of current account, capital a/c, financial account, and statistical discrepancies. • In 2010, Taiwan had a surplus of US$40 billion on the overall balance. This means that Taiwan received a net payment from the rest of the world. • We also can say that the overall balance of payments recorded a surplus of US$40 billion. The surplus reflects an increase in the reserve assets . • When a country has a BOP surplus, its central bank will either retire some of its foreign debts or acquire additional reserve assets from foreigners. • When the central bank acquires reserve assets, it will pay funds (NT$), which will be record under debits (negative sign). • When a country has a BOP deficit, the central bank will liquidate its reserve assets, and will receive funds, which is recorded under credits.

  14. 官方準備帳 (2) • The Official Reserves Assets (or international reserve assets) comprise of: (1) gold, (2) foreign exchange, (3) special drawing rights(SDRs,特別提款權), (4) reserve position in the International Monetary Fund (IMF,國際貨幣基金會). 註: 臺灣非IMF會員國，故無(3),(4). • The official reserve account includes transaction undertaken by the authorities to finance the overall balance and intervene in foreign exchange markets. • When the central bank wishes to support the value of NT$, it sells foreign exchanges to buyNT$. These transactions, which give rise to the demandfor NT$, are recorded as a credit (positive) entry under official reserves. • Reference: Eun and Resnick (2009), p61~67

  15. 中央銀行國際收支資料 • http://www.cbc.gov.tw/lp.asp?ctNode=538&CtUnit=248&BaseDSD=7&mp=1

  16. 歡迎來到中央銀行全球資訊網 ─ BALANCE OF PAYMENTS • For the fourth quarter of 2010, the overall balance of payments recorded a surplus of US$3.40 billion, reflecting an increase in the Bank's reserve assets. • The current account registered a surplus of US$10.10 billion and the financial account showed a net outflow of US$6.56 billion. • In the current account, robust growth in emerging Asia continued to bolster Taiwan's Q4 exports to a historical high, growing by 20.9% from the same period last year. Imports rose year on year by 26.2% due to increases in derived export demand and the international prices of crude oil and other raw materials. • The services account reached a quarterly record with a surplus of US$2.07 billion, mainly attributable to increases in net proceeds from merchanting services and travel receipts. • The income account recorded a surplus of US$2.80 billion, mainly due to higher income from non-residents' portfolio investment and lower income from residents' outward direct investment. • Current transfer deficit was US$0.59 billion.

  17. 歡迎來到中央銀行全球資訊網 ─ BALANCE OF PAYMENTS • In the financial account, direct and portfolio investment registered net outflows of US$2.80 billion and US$0.45 billion, respectively. • Residents' portfolio investment abroad exhibited a net outflow of US$10.51 billion, mainly accounted for by investment in overseas debt securities by insurance companies and overseas mutual funds investment by residents. • Non-residents' portfolio investment posted a net inflow of US$10.07 billion, mainly due to foreign capital inflows for investment in domestic stock and bond markets. • Other investment exhibited a net outflow of US$3.43 billion, mainly attributable to increases in foreign lending by the banking sector. • For the whole year of 2010, the current account registered a surplus of US$40.62 billion, the financial account exhibited a small net outflow of US$0.61 billion, and the overall balance recorded a surplus of US$40.17 billion, reflecting an increase in the Bank's reserve assets. • 參見網頁附件

  18. 會計借貸法則

  19. Double-Entry Accounting System • Debit (借方, -) : Use of funds, 資金自本國居民流向外國居民。 • 就如會計之 「資產增加」，「負債減少」，「淨值減少」。 • 進口、外國居民對本國「其他投資」減少(負債減少)、經常移轉支出(淨值減少) • Credit (貸方, +) : Source of funds,資金自外國居民流向本國。 • 就如同會計裡之 「資產減少」，「負債增加」。 • 出口、本國居民對外國「證券投資」減少(資產減少)

  20. Example 4.1 • Example 4.1.1：日本商以其在美國(本國)的存款支付 • debit credit 外國居民對本國「其他投資」減少 20 (financial a/c) (負債減少) 出口 (current a/c) (資產減少) 20 • Example 4.1.2：日本商將錢存入美商在日本銀行戶頭。 • debit credit 本國居民對外國「其他投資」增加 20 (financial a/c) (資產增加) 出口(current a/c)20

  21. Example 4.2 • Example 4.2：法商(本國)進口並付款給英商在法國銀行戶頭 • debit credit 進口(current a/c) (資產增加)1.5 外國居民對本國「其他投資」增加 1.5 (financial a/c) (負債增加)

  22. Example 4.3 • You receives £0.5 million of coupon payments from your British bonds, and you keep it at your bank account in London. • euro1.5/£ • debit credit 本國居民對外國「其他投資」增加 euro0.75 (financial a/c)(資產增加) 所得收入(current a/c) (收入增加) euro 0.75

  23. Example 4.4 • You (a Japanese) donated $2 million to a U.S. university by selling U.S. bonds which you had. • ¥100/$ • debit credit 經常移轉支出(current a/c) (淨值減少)¥200 本國居民對外國「證券投資」減少 ¥200 (financial a/c)(資產減少)

  24. GNI and GDP • Gross national income (國民所得毛額) = Gross domestic product + Net foreign income  GNI = GDP + NFI • 國內生產毛額(GDP)為在本國疆域以內所有生產機構或單位之生產成果, 不論這些生產者係本國人或外國人所經營者。 • 譬如, 台積電是本國公司,微軟是美國的公司, 但在台灣設有分公司, 這兩家公司所創造的價值都計入台灣的國內生產毛額。 • 國民所得毛額(GNI)為在GDP上加入國外要素所得淨額(即本國住民在一年內從非住民(non-residents)所得到的收入, 再減掉非住民從住民所得到的收入。 • 本國住民之國外要素所得包括: • 本國住民所擁有的外國公司的股票或債券之投資所得, • 本國住民在國外短期工作之薪資收入。

  25. The link between C/A and F/A • 此從支出面計算, GDP = C + I + G + X - M。 • GNI = (C+I+G+X-M) + NFI • GNI – (C+I+G) = X-M + NFI, • 因 X-M + NFI = C/A • 故 GNI – (C+I+G) = C/A • National income – National expenditure = Current account • If a country has a current account surplus, it must have national income that exceeds national expenditures.

  26. The link between C/A and F/A • National savings = Gross national income – Consumption of the private and public sectors  S = GNI – (C+ G) • S = (GDP + NFI) – (C+G) = (C+I+G+X-M +NFI) – (C+G) • S = I + (X-M+NFI) • 故S – I = C/A • If a country’s investments exceed its savings, the country must run a current account deficit; that is , the country’s investment spending must be financed from abroad with a financial account surplus.

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