Latest Developments in the Canadian Economic Accounts
An overview of revisions to the Financial and Wealth Accounts, 1990 to 2020

Background

Statistical revisions are carried out regularly in the Canadian System of Macroeconomic Accounts (CSMA) to incorporate the most current information available. Generally, these revisions are limited to the months or quarters within a given reference year, or, on an annual basis, to the preceding two to three years.

Periodically, comprehensive revisions are conducted, which generally entail revisions beyond the scope of the standard revision window. These provide an opportunity to enhance estimation methods and incorporate improved data sources and concepts.

A number of comprehensive revisions were incorporated in the third quarter 2020 release of the Financial and Wealth Accounts (FWA), which is comprised of the Financial Flow Accounts (FFA), the Other Changes in Assets Account (OCAA) and the National Balance Sheet Accounts (NBSA), and which represents an integrated set of accounts within the larger Canadian System of Macroeconomic Accounts (CSMA). The revisions were carried back to 1990 for certain instruments and sectors.

Among the key revisions implemented with the third quarter 2020 release of the FWA, several are related to the inaugural release of the Monthly Credit Aggregates (MCA) program.

The MCA decomposes a portion of the NBSA (stocks) into the monthly space, providing details on lending to households and non-financial corporations across a range of credit instruments including mortgage loans, non-mortgage loans, and debt and equity securities.

To ensure coherence between the two programs, several changes were incorporated into the NBSA. Additional instrument granularity for mortgage loans was introduced providing details on the debt associated with residential versus non-residential properties; this was coupled with the inclusion of mortgage loans into a from-whom-to-whom (FWTW) framework.

Finally, there were numerous statistical revisions arising from updates to specific concepts and methodologies. Altogether, these updates further align the FWA with international guidelines for compiling national accounts such as the System of National Accounts 2008 (SNA2008).

Revisions to mortgage loans

Within the FWA mortgage debt methodology there has always existed an implicit estimate for the value of residential and non-residential mortgages from the perspective of both the debtor (borrower) and creditor (lender).The MCA, as a decomposition of the NSBA, will explicitly provide this mortgage information and incorporate information on the amount of lending by each creditor sector to both households and non-financial corporations. To ensure consistency between each program, the FWA mortgage estimates were reviewed with the objective of identifying and incorporating counterparty information at the level of residential and non-residential mortgages.

Data table for Chart 1



Data table for Chart 1
Table summary
This table displays the results of Data table for Chart 1 Non-financial corporations, current, Non-financial corporations, previous, Households, current and Households, previous, calculated using billions of dollars units of measure (appearing as column headers).

		Non-financial corporations, current	Non-financial corporations, previous	Households, current	Households, previous
		billions of dollars
1990	Q1	70.53	92.47	233.98	226.52
1990	Q2	73.12	95.29	241.69	234.20
1990	Q3	75.16	97.79	245.99	236.93
1990	Q4	75.92	99.29	251.18	240.52
1991	Q1	76.96	100.04	254.43	242.79
1991	Q2	81.91	104.99	259.65	247.50
1991	Q3	81.50	104.67	266.85	254.45
1991	Q4	81.44	104.46	271.77	258.01
1992	Q1	82.16	104.37	272.94	260.90
1992	Q2	83.36	105.27	279.68	266.74
1992	Q3	84.12	105.81	284.59	270.54
1992	Q4	86.45	107.63	290.46	278.07
1993	Q1	86.16	108.29	292.03	278.12
1993	Q2	86.24	109.35	300.25	285.33
1993	Q3	86.72	110.04	303.00	287.75
1993	Q4	86.09	109.40	306.17	289.62
1994	Q1	84.10	109.23	308.54	291.70
1994	Q2	84.37	110.15	311.87	296.62
1994	Q3	81.38	107.63	316.99	300.26
1994	Q4	79.95	106.37	321.96	305.83
1995	Q1	78.83	106.34	324.08	306.27
1995	Q2	76.45	104.32	327.50	307.81
1995	Q3	75.91	104.33	333.64	313.86
1995	Q4	74.25	102.56	334.94	314.59
1996	Q1	72.82	100.43	335.31	315.74
1996	Q2	72.36	100.67	340.09	319.85
1996	Q3	72.09	100.66	344.10	322.99
1996	Q4	72.28	100.82	349.17	326.82
1997	Q1	70.57	99.34	351.53	329.43
1997	Q2	69.82	99.12	356.13	333.15
1997	Q3	69.15	95.36	360.90	340.96
1997	Q4	68.71	95.54	363.98	343.91
1998	Q1	69.66	95.48	368.02	348.48
1998	Q2	70.50	99.44	373.76	351.30
1998	Q3	70.66	98.95	379.95	358.46
1998	Q4	71.04	99.53	386.72	364.04
1999	Q1	70.79	99.63	385.87	366.28
1999	Q2	68.67	99.45	393.01	373.24
1999	Q3	70.11	99.42	396.48	379.23
1999	Q4	70.86	100.77	399.62	382.92
2000	Q1	75.45	99.18	404.46	386.82
2000	Q2	77.83	99.97	408.97	393.08
2000	Q3	79.07	101.14	413.06	396.93
2000	Q4	80.43	102.09	415.73	399.73
2001	Q1	83.89	106.01	417.67	400.88
2001	Q2	85.69	108.75	424.58	407.76
2001	Q3	85.64	109.24	432.28	414.52
2001	Q4	86.83	110.63	439.72	421.13
2002	Q1	87.56	110.13	444.46	427.91
2002	Q2	90.16	113.62	457.71	440.39
2002	Q3	92.68	115.91	465.65	448.07
2002	Q4	95.05	119.10	473.97	455.88
2003	Q1	96.42	120.04	478.69	461.37
2003	Q2	98.65	122.17	486.47	468.20
2003	Q3	102.21	126.31	500.55	481.99
2003	Q4	105.84	128.40	511.12	493.23
2004	Q1	106.96	130.15	518.85	499.64
2004	Q2	109.66	132.29	536.65	519.23
2004	Q3	112.57	135.27	552.10	533.75
2004	Q4	113.96	137.48	565.02	546.01
2005	Q1	116.23	139.20	570.93	552.61
2005	Q2	119.18	141.58	587.98	569.72
2005	Q3	123.52	145.69	606.61	587.83
2005	Q4	125.29	148.52	620.73	602.50
2006	Q1	127.08	149.71	631.04	614.04
2006	Q2	130.35	152.40	646.28	630.37
2006	Q3	132.74	155.20	663.66	647.22
2006	Q4	136.28	158.90	683.74	667.10
2007	Q1	143.44	168.08	700.82	680.63
2007	Q2	146.53	172.87	727.61	705.90
2007	Q3	150.36	176.79	754.27	732.40
2007	Q4	153.60	180.10	776.67	753.51
2008	Q1	164.66	175.12	786.20	768.35
2008	Q2	169.49	177.72	809.50	792.81
2008	Q3	171.85	180.17	831.46	813.59
2008	Q4	173.63	181.11	846.00	826.79
2009	Q1	174.09	187.11	855.81	829.06
2009	Q2	175.44	188.71	874.61	847.74
2009	Q3	177.18	190.87	895.01	867.09
2009	Q4	178.88	192.79	912.68	884.36
2010	Q1	181.01	194.12	922.85	896.02
2010	Q2	184.41	198.60	950.37	923.03
2010	Q3	186.24	200.97	965.94	937.77
2010	Q4	188.85	204.30	981.29	952.66
2011	Q1	189.19	217.81	990.92	951.34
2011	Q2	190.07	220.66	1,015.62	975.54
2011	Q3	192.11	224.09	1,037.22	996.16
2011	Q4	194.41	227.09	1,046.60	1,011.17
2012	Q1	196.07	231.54	1,057.18	1,020.06
2012	Q2	199.88	235.73	1,074.38	1,037.24
2012	Q3	201.88	236.87	1,090.98	1,055.25
2012	Q4	205.48	240.47	1,101.94	1,065.93
2013	Q1	210.93	240.52	1,106.85	1,074.06
2013	Q2	214.06	245.29	1,125.89	1,092.63
2013	Q3	218.11	250.09	1,143.77	1,110.42
2013	Q4	223.00	255.59	1,154.12	1,120.44
2014	Q1	223.44	255.76	1,161.53	1,127.02
2014	Q2	225.86	258.00	1,179.18	1,145.19
2014	Q3	228.28	261.35	1,200.21	1,165.43
2014	Q4	229.88	263.18	1,213.16	1,177.94
2015	Q1	232.84	266.12	1,224.31	1,188.12
2015	Q2	234.58	268.42	1,247.12	1,211.21
2015	Q3	238.85	273.47	1,273.67	1,236.71
2015	Q4	241.98	276.98	1,292.95	1,255.64
2016	Q1	245.02	279.35	1,302.95	1,264.99
2016	Q2	247.66	282.31	1,328.81	1,290.81
2016	Q3	251.48	286.97	1,354.13	1,315.82
2016	Q4	252.48	288.71	1,369.88	1,331.55
2017	Q1	253.50	289.34	1,380.83	1,342.09
2017	Q2	259.19	295.15	1,404.14	1,365.54
2017	Q3	262.19	298.33	1,423.47	1,385.21
2017	Q4	268.90	305.60	1,437.85	1,399.14
2018	Q1	270.96	308.99	1,445.56	1,404.84
2018	Q2	275.32	313.22	1,457.91	1,418.01
2018	Q3	278.52	316.89	1,473.32	1,434.09
2018	Q4	283.75	322.19	1,483.68	1,444.71
2019	Q1	286.52	325.42	1,491.88	1,451.18
2019	Q2	291.58	328.97	1,510.20	1,471.50
2019	Q3	297.16	334.17	1,532.24	1,493.83
2019	Q4	301.64	338.26	1,549.94	1,511.15
2020	Q1	311.96	354.23	1,568.76	1,525.81
2020	Q2	319.40	359.29	1,598.07	1,552.54
2020	Q3	319.63	Note ...: not applicable	1,631.56	Note ...: not applicable
... not applicable Source: Statistics Canada, "An overview of revisions to the Financial and Wealth Accounts, 1990 to 2020", Latest Developments in the Canadian Economic Accounts (13-605-X), 2020.

Classification of mortgages based on property type

While mortgages by property type were implicit in the FWA and used to construct estimates of total mortgages, further investigation was required to examine assumptions and review lenders across a range of sectors including chartered banks, credit unions, and other corporations engaged in lending such as mortgage finance companies.

This investigation led to the re-classification of some sectors’ mortgage assets from residential to non-residential and vice versa. For example, certain data sources only provide a total mortgage asset for a given sector and, in some cases, these were entirely allocated to non-residential properties. Further research indicated that these were largely related to insured residential mortgages. Correspondingly, some sectors that previously had a higher proportion of residential mortgages were found to be involved to a greater extent in commercial mortgages. As such, the source data was adjusted accordingly. Generally, data from regulatory sources is more comprehensive, allowing for a clear distinction between mortgage types, whereas detail is less granular among other lenders operating under different underwriting standards.

The broad definitions of non-residential and residential properties are outlined in Table 1. The guiding principle is that residential properties exist for the long-term accommodation of individuals and are used primarily as residences. This would include those residing permanently in an institution such as a residential care facility.

In practice, there is some inconsistency with how lenders classify property types. For example, mortgage loans tied to multi-unit residential properties may frequently be considered commercial mortgages as they are provided to a lessor who collects rental income from the property. In other cases, institutional dwellings such as retirement homes, frequently operating as a business, may be classified to non-residential properties by lenders. Mixed use properties such as rental apartments with adjoining commercial units are ideally allocated based on the use of floor space; however, in practice lenders are unlikely to make this distinction. Mixed-use condominiums allow for a more accurate classification as the individual condo units have mortgages separate from the commercial portion. Lastly, construction financing may initially be allocated to mortgage or non-mortgage loans, although once the property is constructed the classification becomes clearer. The impact of these alternate classifications is potentially mitigated by the absence of significant lending in these cases, the use of other financing arrangements, or the temporary nature of the discrepancy due to timing.



Lastly, in the FWA, Home Equity Lines of Credit (HELOCs) are classified as non-mortgage loans whereas some financial institutions will group them with mortgages for the purpose of external reporting. Additional details provided on the Quarterly Survey of Financial Statements enabled the removal of HELOCs that were previously embedded in mortgage assets.

Counterparties: mortgage lenders and borrowers

Once the pool of mortgage assets was accurately classified by property type the next step was to determine who was lending to whom as part of the FWA’s From-Whom-To-Whom (FWTW) framework. This approach explicitly identifies the financial interconnectedness across all sectors of the economy by linking financial assets and liabilities with their corresponding counterparties (i.e., a debtor borrowing funds from a creditor represents the two sides of a contractual loan agreement).

Households are not limited to residential mortgage debt as the FWA includes some unincorporated businesses within the household sector and, consequently, a corresponding portion of non-residential mortgages. These same businesses may also be unincorporated lessors that collect rental income from residential properties. At the same time, non-financial corporations may hold residential mortgages as developers and real estate companies may be engaged in residential construction or own residential units as lessors.

In some cases assumptions were made when financial institutions were known to hold National Housing Act Mortgage-Backed Securities (NHA MBS). These mortgages are typically associated with household purchases of residential properties, providing an indication of the borrower counterparty.

A key source in determining counterparty were data on federally-regulated deposit taking institutions collected by the Bank of Canada, the Office of the Superintendent of Financial Institutions (OSFI), and Statistics Canada. Regulatory banking returns administered by these organisations contain information specific to residential and non-residential mortgages provided to either individuals or corporations. Because chartered banks account for the majority of mortgage lending in Canada, small changes in these distributions have an outsized effect on the classification and consequently the mortgage debt of the household and non-financial corporations sector. Overall, a higher proportion of residential mortgages classified to households relative to previous ratios resulted in an upwards shift in household mortgage debt and a corresponding decline in the mortgage debt of private non-financial corporations. A complete picture of household originated mortgages, a component of lending within the household sector, is not currently possible due to data limitations.

Other statistical, conceptual, and methodological revisions

Securities reconciliation and integration—monthly information

Statistics Canada produces information on securities statistics through the Monthly and Quarterly Securities programs. This includes debt securities such as bonds and commercial paper and equities such as shares listed on public exchanges. The MCA includes monthly detail on the outstanding debt and equity securities of private non-financial corporations. To ensure alignment between the MCA, FWA and monthly Securities Statistics program, information from the latter was incorporated in the quarterly FWA estimates at both market and nominal value. This was necessary to facilitate benchmarking between the FWA and MCA. However, some reconcilable differences exist between the FWA and Securities Statistics due to classification and methodological differences specific to each program.

Revisions to other sectors and instruments

Table 2 summarizes other changes that were incorporated into certain FWA time series.



Data table for Chart 2



Data table for Chart 2
Table summary
This table displays the results of Data table for Chart 2 Non-financial corporations, current and Non-financial corporations, previous, calculated using billions of dollars units of measure (appearing as column headers).

		Non-financial corporations, current	Non-financial corporations, previous
		billions of dollars
1990	Q1	186.27	181.09
1990	Q2	189.93	184.74
1990	Q3	190.09	184.91
1990	Q4	188.40	183.24
1991	Q1	188.22	183.05
1991	Q2	184.31	179.11
1991	Q3	181.67	176.49
1991	Q4	183.12	177.95
1992	Q1	182.53	177.41
1992	Q2	181.72	176.65
1992	Q3	180.14	175.13
1992	Q4	176.39	171.47
1993	Q1	172.59	167.78
1993	Q2	172.49	167.54
1993	Q3	174.89	169.81
1993	Q4	174.96	169.72
1994	Q1	175.14	169.69
1994	Q2	177.76	171.98
1994	Q3	177.45	171.41
1994	Q4	182.81	176.51
1995	Q1	188.81	182.12
1995	Q2	191.25	184.33
1995	Q3	189.20	182.02
1995	Q4	198.03	190.62
1996	Q1	205.18	197.71
1996	Q2	199.73	193.04
1996	Q3	199.85	192.90
1996	Q4	199.12	191.98
1997	Q1	209.35	201.67
1997	Q2	218.48	209.93
1997	Q3	223.09	214.26
1997	Q4	225.94	216.65
1998	Q1	236.75	227.85
1998	Q2	244.40	235.02
1998	Q3	245.10	235.42
1998	Q4	244.52	234.95
1999	Q1	244.65	238.63
1999	Q2	239.65	233.67
1999	Q3	237.16	231.23
1999	Q4	241.40	235.50
2000	Q1	258.50	252.64
2000	Q2	263.90	258.03
2000	Q3	263.39	257.52
2000	Q4	261.03	255.16
2001	Q1	275.18	269.30
2001	Q2	268.29	262.33
2001	Q3	270.52	264.47
2001	Q4	263.25	257.12
2002	Q1	270.94	264.72
2002	Q2	266.46	260.29
2002	Q3	260.74	254.61
2002	Q4	262.28	256.20
2003	Q1	246.67	240.64
2003	Q2	242.52	236.52
2003	Q3	236.65	230.68
2003	Q4	230.55	224.63
2004	Q1	238.67	232.79
2004	Q2	240.37	234.47
2004	Q3	234.34	228.43
2004	Q4	237.35	231.44
2005	Q1	235.08	229.15
2005	Q2	241.94	235.99
2005	Q3	243.27	237.29
2005	Q4	242.56	236.55
2006	Q1	254.92	248.89
2006	Q2	264.95	258.30
2006	Q3	268.45	261.18
2006	Q4	273.95	266.06
2007	Q1	284.82	276.31
2007	Q2	295.40	286.90
2007	Q3	309.94	301.43
2007	Q4	326.39	317.90
2008	Q1	334.13	325.64
2008	Q2	326.63	318.04
2008	Q3	331.33	322.65
2008	Q4	356.18	347.43
2009	Q1	356.34	345.90
2009	Q2	333.96	327.05
2009	Q3	314.98	307.28
2009	Q4	300.31	291.72
2010	Q1	287.22	279.09
2010	Q2	280.09	274.64
2010	Q3	276.78	271.87
2010	Q4	278.96	273.44
2011	Q1	294.20	277.71
2011	Q2	291.31	275.14
2011	Q3	303.79	287.09
2011	Q4	302.43	281.71
2012	Q1	328.95	309.33
2012	Q2	334.64	315.35
2012	Q3	341.14	319.36
2012	Q4	339.53	315.35
2013	Q1	352.33	327.82
2013	Q2	378.86	352.28
2013	Q3	379.77	351.31
2013	Q4	378.45	348.73
2014	Q1	396.91	367.89
2014	Q2	407.93	380.81
2014	Q3	425.30	398.99
2014	Q4	430.99	399.92
2015	Q1	448.98	417.57
2015	Q2	468.35	438.70
2015	Q3	475.58	440.69
2015	Q4	484.96	456.38
2016	Q1	474.30	439.15
2016	Q2	497.80	465.74
2016	Q3	496.37	464.98
2016	Q4	505.72	465.92
2017	Q1	517.12	473.44
2017	Q2	531.75	487.94
2017	Q3	544.48	503.27
2017	Q4	544.69	495.81
2018	Q1	565.12	514.53
2018	Q2	589.07	540.57
2018	Q3	606.03	554.99
2018	Q4	629.15	568.68
2019	Q1	644.55	594.02
2019	Q2	658.34	596.14
2019	Q3	662.84	599.53
2019	Q4	666.59	600.38
2020	Q1	740.32	657.56
2020	Q2	723.66	647.87
2020	Q3	716.50	Note ...: not applicable
... not applicable Source: Statistics Canada, "An overview of revisions to the Financial and Wealth Accounts, 1990 to 2020", Latest Developments in the Canadian Economic Accounts (13-605-X), 2020.

Future directions

Future developments planned for the FWA included the further incorporation of instruments into a from-whom-to-whom framework. For example, work to develop a holder dimension for debt securities is underway providing information on which sectors hold debt securities issued by Canadian borrowers both domestically and abroad. Work on identifying the holder sectors of private equity and inter-corporate loans is also progressing.

Additionally, further alignment of the current FWA sector and category classification with international standards is under review. Specific changes that will be the focus over the next year include the re-classification of repurchases agreements to loans as recommended by the SNA 2008 and the re-classification of derivatives to its own instrument. Currently, both of these items are classified as other assets and liabilities, but ongoing work to better allocate this category will provide more explicit details on its contents. Finally, various business accounting changes that have recently been implemented (i.e., leases) or that will be implemented soon are under investigation to ensure their impact on the FWA is understood and that estimates remain conceptually sound.