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Contents

Definition of abbreviations
Summary

1 Methodology
1.1. Methodological foundations of financial accounts
1.1.1. Role of financial accounts in statistics
1.1.2. Methodological principles, rules
1.1.3. Content of economic sectors
1.1.4. Financial instruments
1.1.5. The applicability and limitations of financial accounts
1.2. The compilation methods of financial accounts
1.2.1. International experience in the area of compiling financial accounts
1.2.2. Principles of compiling Hungarian financial accounts
1.2.3. Data sources of financial accounts
1.2.4. Products of financial accounts
1.3. Compilation of quarterly financial accounts from 1990
1.3.1. Compiling process of financial accounts
1.3.2. Retroactive revision of data, creation of uniform time series
1.3.3. Compilation of financial accounts with individual instruments
1.3.4. Items requiring special accounting

2 Analyses
2.1. Analyses according to sector
2.1.1. Financial accounts of households
2.1.2. Net lending/net borrowing and financial worth of general government
2.1.3. Financial links with the rest of the world
2.1.4. Financial accounts of non-financial corporations
2.1.5. Hungarian and international financing patterns
2.2. Analyses according to instruments
2.2.1. Features of securities other than shares
2.2.2. Unquoted shares and other equities

3 Tables

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Summary

The financial accounts comprise the financial statistics relating to the national accounts which indicate the financial worth (financial assets and liabilities) of the total economy and parts thereof (its sectors), reasons linked to its changes affecting the economy and the net lending/net borrowing relationship between the institutional units. The financial accounts function as an integrating statistics which compile and supplement central bank data on sector and instrument statistics (monetary statistics, balance of payments statistics, securities statistics) in a uniform manner, thereby providing consistent information on the financial position of the economy as a whole, allowing comparisons in space and time. Consistency and comparability is also ensured through the application of international statistical recommendations and rules (SNA93, ESA95) relating to national accounts.

The MNB is responsible for compiling financial accounts in Hungary, on the basis of work division between the statistical organs. Since the midnineties, the central bank has been making continuous preparations for carrying out the above responsibility through the organization of data collection, acquisition of methodological skills and the elaboration of the data compilation process. As a result of the development process, the range of applied data resources used for the financial accounts and the compilation method of the statistics were finalized in 2002. On the basis of the above, from April 2003, each quarter the MNB publishes the financial accounts of the national economy on its internet website with a quarterly lag. In parallel, it supplies data to the institutions of the European Union, Eurostat, the ECB and other international institutions. The central bank uses the financial accounts in the process of monetary decision making. Statisticians regularly develop and expand information contained in the financial accounts. Accordingly, in 2003, the time series, initially spanning five years, were revised retroactively to the beginning of 1995 and the beginning of 1990 in 2004, with maintained quarterly frequency. In parallel to the above process, the widening of statistics was commenced with data related to the 1980s and 1970s.

The application possibilities of financial accounts are wide ranging. The segmented analysis of stock data reveals the structure of the financial worth of individual economic sectors, the prevalence of various financial instruments, the weight of the financial intermediary system in the economy and the financial openness of the economy visa- vis the rest of the world. Flow data indicates the rate of change in the financial worth of the individual economic sectors in the examined period (quarter, year) and the related reasons. Among the above figures, it is possible to isolate transactions, representing the financing operation resulting from the sale and acquisition of financial instruments, and revaluation, as the impact of the economic environment on the value of assets. On the basis of the above, we may determine the effect of changes in market interest rates and prices on the value of various assets and the worth of individual sectors in the examined period. Transaction related data indicates the type and issuing sector of financial assets preferred by specific sectors for investment purposes, determining the value and type of instruments used by the various institutional units for net lending/net borrowing. The uniform time series of the financial accounts allow the analysis of the changes in volume and flow data in time, and the common methodology enables the comparison of domestic data on an international scale. In addition to the above functions, the financial account statistics serve the supplementing and monitoring of non-financial national accounts, for the transaction data indicates the type of financial instruments (issued by other sectors or the rest of the world) invested in by a specific sector or the whole of the national economy with the disposable amount of income, after consumption and investment (balance of non-financial accounts), thereby satisfying the net borrowing requirement of sectors, spending or investing in excess of their income.

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