Financial institutions’ activities are to the extent possible recorded in the financial accounts of the country in which they reside. The same definition of residency applies in the Money and Banking Statistics as in the Balance of Payments and the System of National Accounts:
‘An institutional unit has a center of economic interest within a country when there exists some location, dwelling, or place of production from which the unit engages and intends to continue engaging in economic activities and transactions on a significant scale over either an indefinitely or a finite but long period of time. A one year period is a suggested guideline to what is a long period, but this rule is flexible.’
The rule of governing the determination of residency of financial institutions is particularly important in the case of incorporated and unincorporated subsidiaries and branches of non-resident principals. E.g., a subsidiary unit of a non-resident principal is regarded resident of the economy in which its operations are carried out. This is irrespective of the types of financial instruments it deals in, the transactors of the domestic or foreign economy it deals with, or the currency in which its assets and liabilities are denominated.
|
RSS