Bloomberg has mistaken cross-border payments for non-resident flows
In a news article published today, Bloomberg erroneously said that 900 billion euros’ worth of non-residents’ payments passed through Estonia in 2008-2015. These 900 billion euros are actually the aggregate amount of cross-border payments received in Estonia and paid from Estonia. The sum includes import and export by Estonian companies as well as routine financial transactions such as securities purchases.
A cross-border payment is made when an Estonian entrepreneur sells milk to Lithuania or an electronics company moves money from Sweden to Estonia. Bloomberg’s claim that these 900 billion are made up of non-resident flows is therefore misleading. The 900 billion euros do contain non-residents’ payments, but they only make up one part of the sum. These are cross-border payments, and Estonia, being a small and open economy, has a lot of export and import. Exports and imports mean that money moves across country borders, and this constitutes cross-border payments. Bank clients made 442 billion euros’ worth of payments from abroad to Estonia in 2008-2015, and Estonia sent 446 billion euros in payments abroad during the same period.
Cross-border payments certainly include non-resident flows, but the central bank does not collect separate statistics for these transactions. The statistics collected by Eesti Pank can establish whether a payment is sent to a foreign bank or is received from a foreign bank, or whether the payment moves between banks that operate in Estonia. However, central bank statistics do not hold information on whether the person who initiated a payment in a foreign or an Estonian bank was a resident of Estonia or not.