Page 81 - Invited Paper Session (IPS) - Volume 2

IPS184 Kimiaki S. et al.
identify capital flows in detail by merging these sets of statistics, such as
positional breakdowns by reporting region and country, currency, and
counterparty sector. Reflecting this point, they are used widely for analysis on
topics related to international finance.
Capital and credit transactions through banks are accounted as either of
the following bases: (1) banking accounts in which a bank’s own funds are
involved in transactions for purposes such as funding or fund management,
or (2) trust accounts in which a bank holds and manages funds on behalf of
third parties. In the IBS, reporting practices of trustee business vary across
reporting countries. While many countries including major ones report figures
of positions based solely on banking accounts, there are several countries
whose reporting figures include positions based on trust accounts in addition
to those based on banking accounts (banking-and-trust-account basis), such
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as Japan. Differences in their coverage should therefore be taken into account
when carrying out international comparative analysis using the IBS in Japan,
notwithstanding their feasibility of capturing international capital flows and
credit exposures through the banking sector in a broader sense, reflecting
their wide coverage of funds and credit transactions.
In this regard, it is not currently possible to exclude trust-account-based
positions from the IBS in Japan and compile positions based exclusively on
banking accounts in order to conduct international comparative analysis. This
limitation arises due to reasons related to the non-availability of breakdowns
of reported positions. With the objective of carrying out an international
comparison of the IBS based on banking accounts, this paper attempts to
estimate the IBS in Japan wherein the positions are separated into those
pertaining to banking or trust accounts under certain assumptions. We then
provide comparative analysis of the estimated banking-account-based IBS in
Japan with the IBS of banks of other major nationalities. Further, this paper
outlines the characteristics of international capital flows and credit exposures
held by Japanese banks through transactions undertaken on a banking-
account basis.

2. Estimates of the positions on banking-account and trust-account
bases
In the LBS, debt securities account for 74 percent of the external claims
held by Japanese banks as of end-June 2018. While a country breakdown or a
sectoral breakdown of debt securities held by individual reporting banks is not
available for reasons regarding how the statistics are compiled, their
aggregated amount is distinguishable into banking-account- and trust-
account-based figures. Aggregating the figures of the reporting banks 6
separately by trust banks and the rest of the banks, trust-account-based debt
securities account for more than 90 percent of the external claims of the trust

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