The consolidated wealth of nations: a first step using BIS data

This study argues that a consolidated, national perspective on external positions is for many questions more relevant than the usual balance-of-payments based measure. As a first step towards making this perspective... [ view full abstract ]

This study argues that a consolidated, national perspective on external positions is for many questions more relevant than the usual balance-of-payments based measure. As a first step towards making this perspective operational, we use BIS consolidated international banking statistics to estimate the consolidated international banking integration of 29 economies that represent the bulk of global GDP. In principle, multinational banking makes for large stocks of local currency positions that consolidation adds to external positions, so consolidation can raise openness as well as redistribute it across countries. In practice, we find that in general bank-related openness is greater on a consolidated basis by an estimated 40 percentage points of GDP than on a balance-of-payments basis. This holds for most jurisdictions and the exceptions are offshore financial centres like Luxembourg, which is less open after consolidation. The relationship between bank-related asset openness and GDP per capita is stronger than between external bank assets and GDP per capita.