Euro area balance of payments and international investment position vis-à-vis main external counterparts

by José Manuel González-Páramo Member of the Executive Board
Introductory remarks to a press briefing on the occasion of the launch of a new set of statistics on the geograhical breakdown of the euro area balance of payments and international investment position
Frankfurt, 21 January 2005

Ladies and Gentlemen,

Welcome to the ECB. Today it is my pleasure to introduce an important new set of statistics for the euro area as single economic entity. These statistics provide a breakdown of euro area balance of payments transactions and international investment positions by counterpart country and area and are compiled by the ECB’s Directorate General Statistics.

In recent years, major progress has been achieved in developing monetary, financial and balance of payments statistics for the euro area. This work, carried out in close cooperation with the Member States, has resulted in a full range of timely and high quality euro area statistics, which the ECB constantly monitors in performing its policy functions.

Balance of payments statistics for the euro area have long been available at a monthly frequency, and will continue to be published every month. We will today present, for the first time, a geographical breakdown of the euro area balance of payments. From now on, this breakdown will become available at a quarterly frequency. In addition, we also present the geographical breakdown of the international investment position that will be available for end-years.

Let me explain the rationale for this geographical breakdown of the balance of payments and international investment position statistics. The euro area is a major economy and is in fact the largest participant in many world markets. In turn, it is affected by a broad range of external developments, both financial and non-financial. Growing integration within the euro area has not reduced the need to analyse the global markets in which economic entities in the euro area are so active.

For the ECB, it is crucial to have the best possible understanding of how external developments affect the euro area. Therefore, the ECB continually assesses the nature, magnitude and pass-through of external shocks.

The new geographical breakdown – consisting of eleven important counterparts of the euro area – will provide a consistent framework in order to better understand how external links may affect the euro area economy, including:

  1. through external trade in goods and services, and

  2. through financial flows and positions vis-à-vis the rest of the world.

In a nutshell, the geographical breakdown of the euro area b.o.p. that we will present today reveals the current importance of trade and capital flows with the United Kingdom, the United States and Switzerland. In the year from the fourth quarter of 2003 to the third quarter of 2004, these three countries accounted for approximately 40% of euro area trade in goods and services and for most of its financial transactions. The importance of the United Kingdom, the United States and Switzerland is confirmed by the geographical breakdown of the international investment position at the end of 2003.

I am convinced that the geographical breakdown of the quarterly euro area balance of payments and annual international investment position statistics will add new insights into the external economic relations of the euro area.

Thank you very much for your attention.

Now, the Director General Statistics, Mr. Steven Keuning, will present more detailed features and the first results of the new statistics.

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