Euro area FDI also exhibits a strong correlation between gross assets and liabilities, especially in financial centres, which points to the importance of the pass-through of financial flows for the evolution of FDI data. [7] The challenge in interpreting headline FDI data is further compounded by the large presence of SPEs in a number of euro area countries. SPEs account for sizeable shares of cross-border financial transactions and positions in FDI. Statistics on SPEs, however, remain underdeveloped, since these do not follow a harmonised international definition and data are systematically collected only for a limited set of countries. The limitations of cross-border statistics also make it difficult to analyse properly international financial exposures. [8] Although data on international financial transactions and positions have improved significantly over the past decade (in terms of coverage and details available on instruments, sectors and geographic breakdowns), visibility on the links between ultimate investors and ultimate issuers of financial instruments remains limited. [9] The identification of ultimate exposures has been further complicated in recent years by the expansion of international financial intermediation chains, which often involve nonbank entities located in international financial centres. [10] A good example of this is the difficulty in measuring foreign currency exposures in international balance sheets – for which official statistics remain sparse – although research-based datasets have recently made some inroads in this area (Chart 5). [11]  Chart 5 Cumulative distribution of net foreign currency exposures  Source: Bénétrix, A., Gautam, D., Juvenal, L. and Schmitz, M. (2020), op. cit.

(2017), “The treatment of global firms in national accounts,” Central Bank of Ireland Economic Letter No. 2017-1; Avdjiev, S., Everett, M., Lane, P.R. and Shin, H. S. (2018), “Tracking the international footprints of global firms”, BIS Quarterly Review, Bank for International Settlements, March; also Lane, P.R. (2020), op. cit., and Di Nino, V., Habib, M. M. and Schmitz, M. (2020), “Multinational enterprises, financial centres and their implications for external imbalances: a euro area perspective”, Economic Bulletin, Issue 2, ECB. 4. See Lane, P.R. (2020), op. cit. 5. See Pastoris, F. and Schmitz, M. (2020), “Box 5 Euro area-US current account asymmetries: the role of foreign direct investment income in the presence of multinational enterprises”, Economic Bulletin, Issue 2, ECB. 6. See Lane, P.R. and Milesi-Ferretti, G.M. (2018), “The External Wealth of Nations Revisited: International Financial Integration in the Aftermath of the Global Financial Crisis”, IMF Economic Review, Vol. 66, No 1, International Monetary Fund, pp. 189-222; and McQuade, P. and Schmitz, M. (2017), “The Great Moderation in International Capital Flows: A Global Phenomenon?”, Journal of International Money and Finance, Vol. 73, pp. 188-212. 7. See also Di Nino, V. and A. Ekstam (2020), “What value added in the trade balances of euro area financial centres?,” ECB Working Paper Series, No. 2506. 8. See Lane, P.R. (2015), “Risk Exposures in International and Sectoral Balance Sheet Data", World Economics, Vol. 16, No 4, pp. 55-76. 9.