11 Nov 2020

Global Financial Transactions : $14.07 quadrillion in 2019

Important Note - added 15th November 2020

I have just discovered that the BIS dataset double counts one of the most significant players, with the results that previous values for Global Financial Transactions have been overestimated. My apologies for that.  If you look at Table T14 for the United States, you will find the following information

I noticed that the FICC value was systematically equal to the sum of FICC:GSD and FICC:MBSD which was very suspicious. And indeed, by clicking on the note (1) you get the following message

As a result, the I provided on the 11th November, claiming a total value of €15.65 quadrillion were substantially higher than they should have been. I have corrected the figures here.

I've just analyzed the Bank for International Settlements data on Financial Transactions for 2019. The total comes to a very impressive $14.07 quadrillion - up 4% on 2018.

It took a bit of work because the BIS has not been particularly forthcoming with the numbers. In previous years, they published the data in September. But for the last couple of years, the data has come out at a later date. Furthermore, they don't include the date for  publishing the dataset on their release schedule. I wrote to them back in October and was told that the data should be available in November. 

Anyway, it has all been published now - see their website. It's not trivial to compile the complete data set because the numbers are contained in several different tables.

Specifically, you need to get the data from  

  • Table PS3  (Payments processed by selected payment systems)
  • Table CCP3 (Transactions cleared by selected central counterparties and clearing houses)
  • Table C3D3 ( Transactions processed by selected central securities depositories)
  • Table CT7 (Use of payment services/instruments)

If you want more specific details, you can use Table CT8, which breaks down payments services into 

  • Credit Transfers
  • Direct Debits
  • Cheques
  • Card and e-money payments
  • Fast payments

The dataset provides information for the following 27 countries and regions that constitute a substantial proportion of the world economy.

  1. Argentina
  2. Australia
  3. Belgium
  4. Brazil
  5. Canada
  6. China
  7. Euro area
  8. France
  9. Germany
  10. Hong Kong SAR
  11. India
  12. Indonesia
  13. Italy
  14. Japan
  15. Korea
  16. Mexico
  17. Netherlands
  18. Russia
  19. Saudi Arabia
  20. Singapore
  21. South Africa
  22. Spain
  23. Sweden
  24. Switzerland
  25. Turkey
  26. United Kingdom
  27. United States

I've downloaded all the different datasets for all the available years (2012-2019) and compiled them in a Google Sheet file that you can find here.  But the bottom line is clearly demonstrated by this graph which shows the total values for each year, peaking in 2019. 


I've already published this sort of data in previous years, but I suspect that this graph is more reliable, since the data formats are consistent from year to year.

If you want to see where those transactions are taking place, the BIS data sets provides a useful break-down. My Google Sheet analysis lists over 200 different items that you can rank in terms of value. The following table shows only those players that handled over $100 trillion in transactions.

The biggest player of them all is  CLS Group which also handled over €1.5 quadrillion. Interestingly, B.I.S. does not even localise CLS Group in a country. Next comes the Government Securities division of the US based FICC (Fixed Income Clearing Corportation) that handled $1.48 quadrillion. In fact, if you add in the second component of FICC - the Mortgage Backed securities division (MBSD), the FICC total exceeds CLS Group, at $1.57 quadrillion.

But it is interesting to see that these keyplayers are spread across the globe, with London based LCH.Clearnet, HVPS in China and Euroclear Bank in Belgium all handling very large sums. 

Although the numbers are very large, it seems clear that they must be seriously underestimated. For  reasons that are unclear, BIS does not include some very significant players. One of the most glaring omissions is the Chicago Based Options Clearing Corporation (OCC), which describes itself as "the world's largest equity derivatives clearing organization". In 2018, they cleared 5,137,201,519 contracts - up 22.6% on 2017. The volume dropped back a bit in 2019 (down to 4,976,978,519), but 2020 has been a truly bumper year. They handled over 636 million contracts in October alone - up 41.1% on the previous year, and bringing the total for 2020 to over 6 billion with two months to go. 

But even without including OCC and other keyplayers missing from the BIS's dataset the potential significance of these numbers should be clear. For over ten years, I have been arguing that a very modest Financial Transaction tax on all such transactions would provide all the funding we could possibly need to tackle global challenges like the Covid pandemic, global warming and poverty.  A 0.01% FTT would generate over $1 trillion in revenue per year. For me, it is simply incomprehensible that our tax systems are essentially all designed to tax citizens via VAT and Income tax. Why not tax financial transactions instead?

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