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FISIM recording

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Description of the issue
The ISWGNA, according to its terms of reference, established a Task Force on FISIM to address how the composition of the services that FISIM covers (particularly, risk management and liquidity transformation) affects the selection of the reference rate and the price and volume breakdown of FISIM. In particular, the Task Force focused on determining at most one reference rate per currency for the FISIM calculation. Below is a list of links relevant to the discussion:

Terms of Reference for the Task Force on FISIM (October 2010)

Meeting of the Task Force on FISIM (3-4 March 2011) - List of documents

Meeting of the Task Force on FISIM (5-6 July 2011) - List of documents

FISIM Tests - Consultation

Conclusion of the 7th meeting of the AEG (23-25 April 2012)

Report of the Task Force on FISIM (May 2013)

Conclusion of the 8th meeting of the AEG (28-31 May 2013)

Based on the report of the Task Force on FISIM, the AEG agreed on a number of clarification issues linked to the recording of FISIM. In particular, at its 8th meeting, the AEG agreed on the following:
  1. liquidity transformation services should remain part of financial intermediation services indirectly measured and a single reference rate should be used to determine those services

  2. financial intermediation services indirectly measured should be calculated using at least two groups of currencies (national and foreign currency) in respect of the estimation of imports and exports of those services;

  3. the reference rates for a specific currency need not be the same for providers of financial intermediation services indirectly measured resident in different economies (although they should be expected, under normal circumstances, to be relatively close). In this respect, national statistical agencies are encouraged to use partner-country information or other relevant information, where national estimates are not available;

  4. the calculation of the reference rate should be determined according to national circumstances (preferably using any of the approaches identified by the AEG);

  5. considerable care should be taken in determining estimates of financial intermediation services indirectly measured during periods of volatile movements in reference rates and when liquidity markets begin to exhibit dysfunction, with countries being, in this respect, encouraged to review the applicability of the underlying reference rate for that period to calculating those services when such phenomena occur; and

  6. the calculation of volume measures for FISIM should be calculated by: (i) using a deflated stocks approach (with weights based on types of loans and deposits) in view of its simplicity; (ii) deflating stocks of loans and deposits using a general price, which should itself exclude FISIM; (iii) using domestic price indices for exports, while for imports the appropriate country price indices should be used; and (iv) output indicators could also be used to calculate volume measures of FISIM. Double counting for explicitly charged services should be avoided.
The publication entitled Handbook of National Accounting: Financial Production, Flows and Stocks in the System of National Accounts (United Nations) reflects the agreed clarifications.

The AEG identified the following topics for further research in FISIM:
  1. Developing more clarity regarding FISIM (-related) references in the 2008 SNA, especially in relation to treatment of risk and definition of financial services;

  2. Further develop the conceptual arguments to either include or exclude CDR in the calculation of FISIM and in the case of excluding CDR to develop methods and data that could support a possible exclusion of CDR in the future;

  3. Consider possible hybrid approaches to price and volume measurement;

  4. Further develop the ‘costs of funds’ approach to determine the reference rate, and further develop possible alternative approaches (vintage reference rate);

  5. Consider the financial instruments and units scope of FISIM; and

  6. The connection between the recommendations on implementing FISIM and the definition of income.
The AEG agreed that in setting up the FISIM research agenda the first three items - (a), (b) and (c) - can be considered as clarifications of the 2008 SNA.

This issue is linked to issue 16 of the Research Agenda.

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