The financial accounts of general government cover transactions in financial assets and liabilities as well as the stock of financial assets and liabilities.
At the end of the first quarter of 2020, the EU governments held EUR 2 602 billion in equity and investment fund shares assets.
Governments own equity in other institutions, typically in public corporations or investment funds. This ownership is usually evidenced by having shares, depository receipts, participations or similar documents. There are several reasons for governments to invest in such assets. For example, social security funds might hold them as a way of building reserves for the payment of future social benefits.
Another reason for a government institution to own equity is that it is the owner of public corporations classified as market producers. Examples of such corporations are power plants and airports but also the central bank, which is considered a financial corporation by convention.
Source dataset: gov_10q_ggfa
These assets on the balance sheet represent a residual claim that government has on the assets of the institutions that issued the shares. The EU governments equity assets declined by 5.3% in the first quarter of 2020 mainly due to the adverse impact of the COVID-19 pandemic on the market value of public corporations. On average, equity held by government are not as liquid as listed shares. For example, equity related to central banks generally cannot be sold to third parties.
For more information on quarterly government finance statistics, take a look at the latest Statistics Explained article on this topic, accessible here.
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