In Search of Lost Capital : An Estimation of Undeclared Portfolio Assets

The analyses of the international investment position and balance of payments statistics suggest that foreign assets held abroad are greatly underestimated, in particular in the sector of portfolio investments. The aim of this work is to test this hypothesis and to estimate the magnitude of under-reported assets. The approach is based on the comparison of mirror statistics on portfolio assets and liabilities, mainly using data coming from the Coordinated Portfolio Investment Survey (CPIS) conducted by the IMF, with the addition of information derived from several international databases. For the years from 2001 to 2010 the global discrepancy is estimated to be equal to 7.3% of world GDP on average. Different criteria have been adopted to attribute the share of the estimated under-reporting, particularly significant in the case of mutual funds issued by Luxembourg and the main off-shore centres, to the main euro area countries. Results vary from 6 to 10 per cent of national GDPs. If these amounts were added to national data, statistical consistency in international statistics would improve