F107. Rest of the World (Foreign Investors)
Federal Reserve definition for F107 flow of funds table
The rest of the world sector consists of all entities (individuals, firms, institutions, and governments) not residing in the U.S. that engage in transactions with U.S. residents.
The account measures the participation of foreigners in U.S. markets only, and transactions exclusively among foreigners are not included.
In the flow of funds accounts, the sector is constructed from the perspective of the foreigners, resulting in parallel treatment of the rest of the world sector and the domestic sectors in terms of their roles as suppliers and users of funds.
Thus, the acquisition of domestic assets by both the rest of the world and the domestic sectors provides funding in U.S. capital markets, and increases the liabilities of both the rest of the world and the domestic sectors represent borrowings of funds supplied by U.S. markets.
The perspective in the flow of funds accounts is the opposite of that in the balance of payments accounts, published by the Bureau of Economic Analysis (BEA), which conceptually measure transactions from the standpoint of capital flows for the U.S. economy.
That is, the balance of payments accounts measure an increase in foreign holdings of U.S. assets as a positive capital flow (inflow) for the U.S. and an increase in U.S. holdings of foreign assets as a negative capital flow (outflow) for the U.S., whereas the flow of funds accounts measure an increase in foreign holdings of U.S. assets as a positive use of funds for the rest of the world and an increase in U.S. holdings of foreign assets as a positive source of funds for the rest of the world.
