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Israel's external financial and Foreign-Currency transaction
Definitions and Clarifications
Banking sector: Israel's banking system (see definition below).
Basic account: for nonresidents - investment in Israeli shares, both direct and in the portfolio, in Israel and abroad; for residents - investment in shares of foreign companies less long-term credit taken abroad, including bonds and equity-holders' loans. The basic account reflects market transactions motivated by long-term considerations. Bonds: including convertible securities. Capital transfers: unilateral transfers included in the capital and financial account, e.g., transfers by immigrants. Credit from abroad: including suppliers' credit from nonresidents, and excluding interbank deposits. Credit from Israel's banking system: including credit from earmarked deposits, even if these are at the responsibility of the depositor. Credit to abroad: including customers' credit extended to nonresidents, and excluding interbank deposits. Commercial credit: suppliers' or customers' credit. Current transfers: unilateral transfers included in the current account, e.g., gifts and support payments. Customers' credit: credit extended by (resident) exporters to nonresident customers, less advance payments received by residents from nonresidents on account of exports. Debt instruments: financial assets/liabilities excluding shares, and equity-holders' loans (which are included in direct assets/liabilities). Direct assets1: negotiable shares held by parties at interest, non-negotiable securities, equity-holders' loans, and real estate (for which data are not always available). Direct credit from abroad: credit from nonresidents excluding suppliers' credit. Direct investments2: negotiable shares amounting to more than 10 percent of the company's equity, non-negotiable securities, equity-holders' loans, and real estate (for which data are not always available). The investments also include accrued profit. Direct liabilities3: see parallel definition of direct assets. Equity-holders' loans: loans extended by parties at interest and loans extended by owners of untraded companies to companies in which they have a holding. Financial assets: tradable shares not held as direct assets, bonds, derivatives, deposits, and credit (excluding equity-holders' loans). Financial assets held by nonresidents: tradable shares of Israeli companies not held as direct assets; tradable bonds of the government of Israel and Israeli companies, whether traded in Israel or abroad, denominated in NIS or in foreign currency; deposits (in foreign currency or in NIS) in Israel's banking system; and credit from abroad (excluding equity-holders' loans). Financial assets held by residents: tradable shares of foreign companies not held as direct assets; bonds of foreign governments or companies; deposits abroad; and credit to abroad (excluding equity-holders' loans). Financial investments: negotiable shares that are not held as direct investments, bonds, derivatives, deposits, and credit (excluding equity-holders' loans). Financial liabilities: see parallel definition of financial assets. Financial liabilities of residents: these are identical with financial investments of nonresidents in the nonbanking private sector. Financial sector: financial intermediaries, the banking sector (Israel's banking system), brokers, moneychanging service companies, and institutional investors. Flows: transactions between Israel and abroad, including offsetting or foreign-currency-denominated transactions between residents of Israel. Flows in nonresidents' financial account: financial and direct investments in Israel of nonresidents, including investments in Israeli securities traded abroad. Flows in residents' financial account: financial and direct investments abroad of residents, and new immigrants' capital transfers. Investments by residents in Israeli securities traded abroad are not considered investment abroad. Foreign currency: denominated in or indexed to foreign currency, unless the terms 'denominated' or 'indexed' are used. Foreign-currency assets of the nonbanking private sector: investment in foreign shares, both directly and in the portfolio, foreign bonds, Israel government foreign-currency bonds, foreign-currency deposits in Israel and abroad, foreign-currency credit to nonresidents, the net balance of future purchases of foreign currency against local currency. Foreign-currency assets are those indexed to and denominated in foreign currency; investment by residents in the shares of Israeli companies traded abroad are not considered a foreign-currency asset. Foreign-currency liabilities of the nonbanking private sector: foreign-currency credit from the banking system and credit from abroad. Foreign securities: securities issued by foreign corporations or governments. Gross external debt: the external liabilities of the Israeli economy, in local and foreign currency, excluding nonresidents' holdings of shares and certificates of participation in mutual funds, and including equity-holders' loans. The gross external debt is identical with the 'debt instruments' included in liabilities. Investments: flows or balances of assets/liabilities. The investments include direct and financial investments. In the text the term 'investments' is used for flows and 'investment balances' for balances. Israeli securities traded abroad: securities issued by Israeli companies or the government of Israel and traded abroad. Israel's banking system: this includes ordinary banking corporations, i.e., banking corporations that are not mortgage banks, investment finance banks, or financial institutions as defined in the Banking (Licensing) Law. Israel's international investment position (IIP): the external assets of the Israeli economy (the public sector, the banking sector, and the nonbanking private sector) and its external liabilities (i.e., Israeli assets held by nonresidents, whether denominated in local or in foreign currency). Israeli shares: shares issued by companies registered in Israel and traded in Israel and abroad, held both as direct investment and in the portfolio. Long-term credit: credit extended for a period of more than five years. Medium-term credit: credit extended for a period of over one year and up to five years. Negotiable assets: tradable holdings of shares, bonds, derivatives, certificates in mutual funds, and convertible securities. Negotiable liabilities: see parallel definition of negotiable assets. Negotiable public-sector bonds held by nonresidents: foreign-currency bonds issued abroad by the government of Israel, most of them under US government guarantee (including accrued interest on zero-coupon bonds), and local-currency bonds issued in Israel by the government or the Bank of Israel and bought by nonresidents. Net external debt: the gross external debt less assets abroad other than investments in shares. The net external debt is identical with net debt instruments (liabilities less assets). Net investments in securities (flows): investments less liquidations. Net purchases of NIS assets by nonresidents (net sales of foreign currency): net purchase of local-currency assets less net repayment of local-currency liabilities. Net sales of foreign-currency assets by the nonbanking private sector: net sales of foreign-currency assets less net acquisition of foreign-currency liabilities. NIS assets held by nonresidents: local-currency bonds, local-currency deposits, and net future purchases of NIS against foreign currency; local-currency assets do not include foreign-currency-indexed assets. NIS exchange-rate exposure: assets of residents less their liabilities denominated in or indexed to foreign currency, including NIS/foreign-currency forward transactions and excluding Israeli shares even if they are traded abroad. NIS liabilities of nonresidents: local-currency credit received by nonresidents, except for foreign-currency-indexed credit. Non-negotiable liabilities: see parallel definition of non-negotiable assets. Nonbanking private sector: individuals, companies and other entities (such as nonprofit institutions) which are neither in the public sector nor in the banking sector. Non-negotiable assets: untradable shares and bonds, deposits, and credit. Nonresident4: a person who is not an Israeli resident, the Bank of Israel, or the government of Israel. Residents of the Palestinian Autonomy are considered nonresidents, as are residents permanently domiciled abroad. Other assets: financial assets which are not negotiable securities, i.e., deposits and credit. Other investments: financial investments which are not negotiable securities, i.e., deposits and credit. Other liabilities: financial liabilities which are not negotiable securities, i.e., deposits and credit.. Parties at interest (in traded companies)5: individuals or corporations holding negotiable shares amounting to more than 10 percent of the equity of the company which issued them. Portfolio: financial assets/liabilities which are tradable securities. Private sector: individuals and corporations that are not in the public sector. Public: this includes mortgage banks, investment finance banks, and financial institutions as defined in the Banking (Licensing) Law. Public sector: the government, the Bank of Israel, and the National Institutions. Resident6: an Israeli citizen living in Israel; a person in Israel under an immigrant visa, immigrant certificate, or permanent resident certificate; a corporation registered in Israel; a corporation whose main activity is in Israel; and an Israeli citizen resident in a part of Judea, Samaria or the Gaza District which is not part of the Palestinian Autonomy. Short-term credit: credit extended for a period of up to and including one year. State of Israel Bonds: non-negotiable State of Israel Bonds issued by the Israel Bonds organization (including accrued interest on zero coupon and savings bonds). Suppliers' credit: credit received by (resident) importers from nonresident suppliers, less advance payments paid by residents to nonresident suppliers on account of imports. Tradable assets: shares, bonds, derivatives, certificates of participation in mutual funds, and convertible securities that are negotiable in the market. Tradable liabilities: see parallel definition of tradable assets. ------------------------------------------------------------------------------ 1 The definition of direct assets, as well as of direct investments, parties at interest, and direct liabilities, is in line with that of the IMF. Data originating from the Securities Authority also include convertible securities (which are defined as being included in investments of parties at interest but not in investments as defined by the IMF). 2 See preceding note. 3 See preceding note. 4 See binding definition in the Currency Control Law. 5 See note 1. For reporting purposes, parties at interest are defined in the appendix to the General Permit as a person holding 5 percent or more of a company's equity 6 See binding definition in the Currency Control Law |
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