This limitation is the main weakness of holding statistics derived from liabilities. Other difficulties related to the quality and availability of data must also be taken into account. In particular, custodians may struggle to differentiate between residence and nationality, for example, by assigning a holding to a parent company rather than its subsidiary. The distinction between legal and beneficial ownership can also make it difficult to correctly measure repurchase agreements and temporary transfers of securities. According to international standards for securities and balance of payments statistics, these temporary transactions do not involve a permanent change in ownership. This principle may be more or less difficult to apply depending on the custodians and the countries.
These limitations explain why, in terms of ownership, preference is generally given to asset statistics, which by their very nature identify the holder, even if such statistics also have their own limitations in terms of the securities held. More specifically, they may not include securities holdings managed by non-resident custodians. However, for financial sector holdings, whose outstandings are the highest, this shortcoming can be remedied by collecting data directly from financial intermediaries. Furthermore, for non-financial corporations, data from tax returns can be used to estimate holdings by non-resident custodians. Statistics on assets supplemented in this way are therefore much more reliable than those on liabilities. Their main limitation remains the measurement of offshore assets held by households, which are difficult to estimate and are the subject of much research, for example by the European Commission.
A concrete application: the increase in purchases of US debt securities by the French are overestimated in US liability data
Holdings of US debt securities illustrate the differences between the ‘assets’ and ‘liabilities’ approaches and the fragility of estimates of liabilities.
The US Treasury collects information from the financial sector and US securities custodians, which it then uses to publish data on financial securities holdings in general and US Treasury and debt securities holdings specifically (while clearly indicating the limitations of these statistics due to the fact that the ultimate holders are unknown). The breakdown by holder country shows a very sharp recent increase in holdings of US debt securities by French residents.
According to these US Treasury statistics, French holdings increased from USD 255 billion at the end of 2022, to USD 322 billion at the end of 2023, then to USD 424 billion at the end of 2024 (Chart 1). This rise can be attributed mainly to net purchases, which are expected to reach USD 200 billion in 2023 and 2024 (plus valuation effects).
However, we do not observe these amounts or trends in the French asset statistics in the United States compiled by the Banque de France. According to the Bank, between end-2022 and end-2024, outstandings increased from USD 325 billion (EUR 305 billion) to USD 384 billion (EUR 370 billion); mainly due to net inflows of USD 61 billion (or EUR 56 billion) since end-2022.
The same differences can be observed for US Treasury securities alone, with net purchases since end-2022 of USD 187 billion according to US data, compared with only USD 54 billion according to French statistics.
Compared with the US Treasury’s liabilities data, the sources of uncertainty in French assets data are, however, much less significant and should therefore be favoured when measuring French residents’ holdings
When the comparison is extended to other European countries, similar discrepancies appear.
Chart 3: Comparison of US debt securities holdings: from the US perspective (liabilities) and from the euro area holder countries’ perspective (assets)