Financial and wealth accounts

Glossary

Associations of individuals
Non-profit institutions serving households, such as churches, labour unions and charitable organizations, plus credit unions, trusteed pension plans, life insurance companies, fraternal societies, and mutual non-life insurance companies. They are treated as businesses with respect to their capital outlays and their intermediation activities, but as persons with respect to their current expenses.
Bonds
Marketable and non-marketable securities issued in Canadian or foreign currency with an original term to maturity in excess of one year. Includes:
Canada bonds: Direct bonds of the federal government (of which, Canada Savings Bonds) and guaranteed federal enterprise bonds.
Provincial bonds: Direct bonds of provincial governments (of which, provincial savings bonds) and guaranteed provincial enterprise bonds.
Municipal bonds: Direct bonds of municipalities and guaranteed municipal enterprise bonds.
Other bonds: Bonds issued by Canadian corporations, hospitals and non-profit institutions, as well as non-guaranteed bonds of government business enterprises. Also included are asset-backed securities.
Business sector
All transactors producing goods and services for sale at a price intended to cover costs of production, namely corporations, government business enterprises, unincorporated businesses, and independent professional practitioners. It also includes owners occupying their own dwelling, treated as businesses renting to themselves, and associations of individuals, treated as businesses with respect to their capital outlays and their intermediation activities.
Canada and Quebec Pension Plans
The part of the government sector which consists of the operations of the Canada and Quebec Pension Plans, established in 1966.
Canadian residents
Institutional units, such as persons, corporations and non-profit institutions, which have a centre of economic interest (a dwelling, a business location) in the economic territory of Canada.
Capital and financial account
This account shows, for each major sector; a) the saving and acquisition of non-financial capital and the difference between them, called net lending; and b) transactions in financial assets, transactions in liabilities and the difference between them, called net financial investment. In theory, the two balancing items, net lending and net financial investment, are equal; in practice, imperfections in the statistics lead to a difference between the two, shown as a statistical discrepancy.
Capital consumption allowances
Allowances for the using up of capital in the productive process. They are calculated for business and government fixed assets as well as housing. They also include miscellaneous valuation adjustments bringing business accounting records into conformity with national accounts definitions, such as the addition of claims paid by insurance companies to compensate for fire and other losses.
Capital transfers
Transfers in cash or in kind, out of the wealth of the donor (inheritances and migrants’ funds, transfer of ownership of an asset or cancellation of a liability), or transfers which the recipient is expected to use towards the acquisition of an asset. Capital transfers have no effect on the saving of the donor or recipient.
Claims
Financial instrument comprising:
Corporate claims: Loans, advances and issues of debt between associated corporations; on the asset side, also includes investment in shares between associated corporations.
Government claims: Claims between governments, between related government business enterprises or between a parent government and its enterprises, in the form of shares, debt securities, loans and advances.
Consumer credit
Credit extended to persons for purchasing consumer goods and services.
Corporations and government business enterprise sector
All business transactors whose legal form of organization is the corporation, plus government business enterprises. This sector is divided into non-financial and financial enterprises. The latter are comprised of several sub-sectors (Bank of Canada, chartered banks, credit unions, life insurance companies, trusteed pension funds, mutual funds, etc.). The intermediation activities of credit unions, life insurance companies and trusteed pension funds shown as assets of these sub-sectors are balanced by claim liabilities which, in turn, are assets of the persons and unincorporated business sector.
Currency and deposits
Financial instruments comprising:
Currency and bank deposits: Deposits denominated in Canadian dollars at chartered banks in Canada and at the Bank of Canada, plus Canadian currency and coin in circulation.
Other deposits: All deposits at other Canadian deposit-taking institutions, including shares in credit unions.
Foreign currency and deposits: Holdings of foreign currency and foreign currency denominated deposits at chartered banks in Canada, foreign branches and subsidiaries of Canadian chartered banks, foreign banks and other foreign deposit-taking institutions.
Existing assets
See net acquisition of existing assets.
Fixed capital
See gross fixed capital formation.
Foreign investments
All marketable financial instruments (bonds, short-term paper and shares) which are liabilities of the non-resident sector (foreign governments and corporations) and assets of domestic sectors.
Government business enterprises
Government enterprises and agencies which operate on a profit or cost recovery basis and whose motivation is similar to that of private enterprises. Their total profits (net of losses) are recorded in GDP, while only the profits remitted to government are recorded in the government income and expenditure account, under government investment income. The difference between these two measures, retained earnings, forms part of business sector saving.
Government sector
All departments, agencies, and funds (budgetary and non-budgetary) of the federal, provincial and local levels of government, as well as crown corporations which receive more than 50% of their revenues in grants from their parent governments. Also included are school boards, universities, non-profit colleges, hospitals, non-profit residential care facilities, as well as the Canada and Quebec Pension Plans.
Gross fixed capital formation
This expression covers all expenditures on buildings, engineering construction and machinery and equipment. Gross capital formation in machinery and equipment includes imports of used machinery and equipment since the latter constitute additions to domestic capital stock. Gross fixed capital formation in buildings includes transfer costs on the sale of existing assets (e.g. real estate commissions). Abbreviated as fixed capital in the capital and financial account. Synonym of investment in fixed capital.
Gross saving
Net saving plus capital consumption allowances.
Holding gains and losses
Additions to or subtractions from income which result from selling an asset for more or less than its purchase price. As holding gains and losses are not related to current production, they are excluded from GDP through the inventory valuation adjustment.
Households
A group of persons who share the same living accommodation, pool some, or all of their income and wealth and consume certain goods and services collectively. They may engage in any other kind of economic activity.
Interest on the consumer debt
Interest paid by persons on account of liabilities incurred to finance personal expenditure on consumer goods and services. Consists of two parts: the administrative expenses, representing the cost of rendering services to borrowers, and the remaining “transfer portion”.
Interest on the public debt
Interest payments on liabilities of the government sector.
Life insurance and pensions
Liability of life insurance companies and trusteed pension plans to policyholders or beneficiaries and federal government liability with respect to annuities sold under the Annuities Act, as well as government employer-sponsored pension plans. Asset of policy holders or beneficiaries.
Loans
Financial instrument comprising bank loans and other loans. Negotiated loans made by chartered banks and other financial institutions.
Mortgages
Negotiated loans and agreements of sale secured by real property, mostly residential structures. Includes first, second and third mortgages. Mortgages are characterized by blended repayments, usually monthly, of principal and interest.
Net acquisition of existing assets
A sector’s purchases less sales of used fixed assets and land. Business purchases less sales of natural resources, resource rights and intangible assets are also included. Does not apply to the non-resident sector which, by definition, acquires only financial investments. Abbreviated as existing assets in the capital and financial account.
Net lending
The net lending (or borrowing) of a sector can be measured either through incomes and expenditures or through financial transactions. Under the income and expenditure approach, net lending is the difference between internally generated funds and outlays on non-financial capital. A sector’s net lending equals its saving, plus its capital consumption allowances and net capital transfers from non-residents, less its investment in fixed capital and inventories. Net lending (or borrowing) is also referred to as sector surplus (or deficit). See capital and financial account.
Net reinvested earnings on direct investment
(REI) are profits earned on, less dividends received from, direct foreign investment. From 1961, equity income from direct foreign investment is recorded on an accrual rather than cash basis in the Balance of International Payments. Net REI are defined as REI on foreign direct investment in Canada less REI on Canadian direct investment abroad. Net REI gives rise to an additional reconciliation item between the Canadian Balance of International Payments Accounts and the national income and expenditure accounts, in which this change has not been incorporated.
Net saving
The current income of a sector, less its current expenditure. Includes current transfers but excludes capital consumption allowances and capital transfers. Synonym of saving.
Non-resident sector
All transactors who do not have a centre of economic interest (a dwelling, a business location) in the economic territory of Canada. By definition, non-residents can only engage in financial investment. Any transactor making non-financial investment is deemed to be a resident.
Official reserves
The sum of a) official holdings of gold and foreign exchange (U.S. dollars and deposits in other convertible currencies), b) loans to or from the International Monetary Fund on general account, and c) special drawing rights.
Other financial assets / Other liabilities
Various items not included under other financial instruments, such as accrued interest, interest receivable or payable and prepaid expenses.
Personal saving
Personal disposable income less personal expenditure on consumer goods and services, less current transfers from persons to corporations and to non-residents.
Personal sector
All persons, households and associations of individuals serving households.
Persons
See personal sector.
Persons and unincorporated business sector
Transactors of the personal sector plus those of the unincorporated business sector. In the capital and financial account, transactions of these two sectors are consolidated. In addition, in this account, although credit unions, life insurance companies and trusteed pension plans appear as sub-sectors of the corporations and government business enterprise sector, their transactions in financial assets are balanced by liabilities which, in turn, are recorded as assets of the persons and unincorporated business sector.
Saving
See net saving.
Sector accounts
The quarterly national accounts include the full sector accounts. They record the income, outlay, saving, non-financial and financial investment, borrowing and net lending for the four main sectors: (a) persons and unincorporated businesses; (b) corporations and government business enterprises; c) government; and d) non-residents. See capital and financial account.
Shares
Financial instrument consisting of common and preferred shares (including term preferred shares and mutual fund shares), plus contributed surplus. Stock issued by a government business enterprise to a parent government is classified to government claims.
Short-term paper
Marketable financial instrument comprising:
Government of Canada short-term paper: Treasury bills, which are notes of original term to maturity of less than one year, issued at a discount and sold at auction every week; also includes Canada bills issued in foreign currency.
Other short-term paper: Notes of original term to maturity of one year or less, issued at a discount by a variety of financial and non-financial institutions; includes provincial and municipal Treasury bills as well as asset-backed securities.
Statistical discrepancy
Double-entry bookkeeping is fundamental in national accounting and several aggregates, such as GDP and net lending, can be calculated in two or more ways. In principle, all the measures of an aggregate are equal. In practice, differences invariably arise between them due to imperfections in basic statistics and estimation techniques. This difference is called a statistical discrepancy and serves as the balancing item between two theoretically equal aggregates. It can be recorded as is, like the discrepancy between the two estimates of net lending or it can be divided in two, one half being subtracted from the higher estimate and the other, added to the lower one, like the discrepancy between income-based and expenditure-based GDP.
Trade accounts receivable/payable
Short-term credit advanced or received in the ordinary course of business by suppliers or buyers of business goods and services.
Transactors
Economic agents who engage in transactions involving the purchase and sale of goods and services and the payment and receipt of factor incomes and transfers.
Unincorporated business sector
All business transactors whose legal form of organization is not the corporation. Includes independent business operators, self-employed farmers, fishermen and professionals and unincorporated landlords (including those renting to themselves).
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