Net wholesale debt issuance by the financial sector in Australia over the past six months "has occurred in the domestic short-term market at the expense of long-term domestic and offshore issuance," analysis by one of Westpac's economics team has highlighted.This theme, drawn from the latest ABS data on the Balance of Payments, sits awkwardly with the frequently heard argument from domestic banks that they need to extend the tenors of their wholesale funding toward longer term liabilities, a trend supported by financial regulators and backed by many investors.In Westpac's "Financial(s) Matter" publication yesterday, Elliot Clarke, a director and senior economist at Westpac Institutional Bank, surveyed this week's data on the Balance of Payments and International Investment Position.In a consideration of the data relevant to the financial sector, Clarke knocked over one more routine perception, namely banks as the ever churning cog financing the current account deficit of the Australian economy.Net [debt] issuance by this sector over the past nine years has been negligible," Clarke wrote, "with the stock of wholesale funding at March 2017 only A$26 billion higher than at the end of 2007."Clarke pointed out that "all of the cumulative growth in the stock of wholesale funding took place in first quarter 2016 (split equally between domestic and offshore issuance)."Prior to that quarter, he said, "net issuance since the end of 2007 was negative $3.4 billion" while since the first quarter of 2016, "only a further $2.7 billion has been raised, in net terms."Clarke summed up this section of his commentary: "The above profile emphasises how modest intermediated credit demand from Australian households and corporates has combined with a healthy growth in domestic deposits to restrict the need for Australian financials to increase their wholesale liabilities."The WIB economist, who trained at the RBA before crossing to Westpac in 2010, started off his essay with a summary of data that establishes the alternative principal source of funding for the current account deficit.In short, it was via direct investment and portfolio investment in listed securities."Between 2010 and 2015, with the domestic appetite for intermediated credit modest ... the balance of funding shifted in favour of direct investment in the private sector and, for portfolio flows, to demand for funds from the public sector," Clarke wrote."The net inflow of foreign direct investment into Australia continued through 2016 and now into early 2017."Indeed, the annual inflow of $58 billion in 2016 was ahead of 2015's $51 billion and the average of the preceding five years (back to the beginning of 2010), [of] $45 billion."Clarke said that over the first quarter of 2017, "the pace was in line with 2016, with a net direct inflow of $14 billion reported - a $56 billion annualised pace."In a reminder of how hot topics on the balance of payments ebb and flow, Clarke noted that  "while foreigners increased their stock of Australian portfolio equity investments in quarter one [2017] by $9.1 billion, our net portfolio debt liabilities fell $4.3 billion, bringing the cumulative decline since the beginning of 2016