Who finances whom? Discover the Belgian matrix
Let’s begin by looking at how NBB statisticians compile the national financial accounts. Their primary source of data is the information that banks, insurance companies and investment funds are required to report to the National Bank of Belgium, supplemented by information drawn from firms’ annual accounts, Euronext, the Federal Debt Agency, the balance of payments and the international investment position, among other sources. These data are processed into statistics by different teams, each specialising in a different sector, and then compiled in the national financial accounts.
The power of the matrix
The “who” in the title of this article doesn’t refer to individual economic agents, but rather groups of agents organised by economic sector. These various sectors cover all economic agents at home and abroad: households, non-financial corporations (companies), the government and a host of financial market participants such as the NBB, banks, investment funds, other financial institutions, insurance companies and pension funds. The “rest of the world” includes agents located outside national borders.
The insightful matrix shown below (Figure 1) illustrates the financial flows between all economic sectors in 2023. The rows indicate how much each sector invested in the others, while the columns show how much financing each received.
The figures per sector are presented in a heat map, which reveals the magnitude of the relationship between two sectors: the darker the colour, the more significant the figure (blue indicates a positive figure, while orange denotes a negative one).
State note boosted financial flows
How much did households invest in the various sectors of the economy in 2023? How significant were these financial flows? The cell at the intersection of the “households” row and the “government” column is dark blue, indicating that households invested substantially in the government sector (+€22 billion), while transferring funds away from banks (-€19 billion), with the corresponding cell coloured dark orange. Indeed, in 2023, there was a significant shift away from savings accounts to the one-year State note, as households sought better returns in the face of low interest rates on savings. The “rest of the world” also benefited in this regard, attracting €10 billion in Belgian household savings, mostly in the form of purchases of foreign bonds. The figures in the “households” column show that this group of economic agents mainly received financing from banks, specifically in the form of mortgage loans for the purchase or renovation of residential property.
There were also major shifts in financial flows between the NBB and commercial banks, which were entirely due to monetary policy tightening and the winding down of the asset purchase programmes. The National Bank reduced the assets it holds with banks by €41 billion, while the latter in turn reduced their deposits with the National Bank by almost €20 billion. Banks’ investments in non-financial corporations (+€13 billion) and in economic agents in the rest of the world (+€54 billion) saw strong growth. The latter are primarily foreign banks.
An open economy
The many dark-coloured cells in the “rest of the world” column attest to the very high level of openness of the Belgian economy. Belgian companies import and export goods and services from and to foreign countries, giving rise to monetary claims until payments are collected. They also extend credit to and hold shares in foreign companies. A stake of 10% or more in the capital of a foreign firm constitutes a “qualifying holding”. Relevant figures can be seen in the matrix where the “rest of the world” and “non-financial corporations” (companies) and “other financial institutions” cells intersect. Financial transactions are also carried out with the government, with foreign economic agents purchasing mainly linear bonds and, to a lesser extent, Treasury certificates (+€21 billion). Belgian households, for their part, also invested directly in foreign bonds (+€10 billion).
By publishing these statistics, the National Bank of Belgium helps analysts, economists and policymakers examine the financial health of the economy, discover trends and formulate policy measures. Has this blog article given you a taste for more information on this topic? For detailed figures by economic agent and sub-sector, please visit NBB.Stat.
The authors would like to thank their colleagues in the NBB’s Financial Statistics Division. The matrix is the result of daily efforts by each of them to produce reliable financial statistics.
