Introduction to Framework of Money and Banking

Financial accounts can be compiled either in terms of outstanding balances at a particular point in time – stock data, or in terms of transactions during a particular period – flow data. For practical reasons, money and banking statistics, as presented in IFS, are based on stock data. There are two reasons for favoring stock data:

(i) Most countries are capable of reporting stock data on a current basis as a by-product of their own statistical systems, while production of flow data would have to be on a less current basis and at an additional cost, and

(ii) Changes in stock data can provide approximate measures of financial flows, while the opposite is not possible. However, stock data can only provide approximate flow data if valuation adjustments are small.