1993 SNA Update Information - AEG recommendations for issue:
Financial assets classification
|Issue description in [English] | [French] | [Russian] | [Spanish]|
|Continued innovation in financial markets since the 1993 SNA was written means a review
of the classification used for financial instruments is appropriate. Suggestions for change
arise for most of the present categories.|
(a) Monetary gold
Should monetary gold be treated as a financial asset rather than as a valuable?
The 1993 SNA classifies Special Drawing Rights (SDRs) as assets without
corresponding liabilities arguing that IMF members do not have an unconditional liability to
repay their SDR allocations. However, SDR allocations have attributes of liabilities because
interest is payable on them and a country terminating IMF membership would be required to
repay its obligations including any SDR allocations. Also, the IMF Monetary and Financial
Statistics Manual recommends that the value of allocated SDRs be shown both on the assets
and liabilities side of the balance sheets of central banks, which is in accordance with the
IMF’s SDR Department’s guidance to member countries. Should SDR allocations be
considered liabilities in the SNA?
(c) Distinction between loans and deposits
The criteria to make the distinction between deposits and loans are not clear. Recent
financial innovations raise questions about the continuing analytical usefulness of the
distinction. A particular problem is when a position between two parties, especially financial
institutions, is seen as a deposit by one party and a loan by the other. Should the SNA
maintain a distinction between loans and deposits?
(d) Traded loans
When and under what circumstances do loans that are traded become securities? This is
important because virtually all loans are tradable and trading has increased. It also affects
market valuation since securities are valued at market price in the SNA and loans at nominal
(e) Securities other than shares
With financial derivatives treated as a separate instrument in the 1993 SNA, it would be
appropriate to introduce the term “debt securities” to replace “securities other than shares”.
Should there be a distinction between different types of financial derivatives, for example
between forwards and options as well as the inclusion of employee stock options (see issue
3) in this category?
|Number of AEG recommendations for selected issue:||4|
| Corresponding meeting||Date posted||Recommendation|
| Jan-Feb 2006||4/7/2006||Non-monetary gold|
The AEG noted that there was little opposition to these proposals covered in the e-discussion, although there was a high proportion of “No opinions” for some of them.
The AEG agreed to questions (a), (b) and (d), but not question (c). On question (e), the AEG felt it was not necessary to change the terminology “In foreign currencies”.
| Jan-Feb 2006||4/7/2006||Classification and terminology of financial assets and liabilities in the updated SNA|
| July 2005||9/12/2005||Traded loans (borderline between securities and other financial instruments)|
With respect to question (a), the AEG decided that the current SNA position should be maintained: that is, the loan should be reclassified as a security only if there is evidence of a market and there are quotations in the market.
This change of category of financial instrument is achieved via a change in classification entry in the other changes in the volume of assets account and not via transactions cancelling the loan and issuing a security.
The fact that a loan is sold once does not necessarily involve reclassifying the loan as a security.
Questions (b) and (c) were not considered by the AEG because in general traded loans would not be reclassified as debt securities – they would not change their classification status as a result of being sold.
There was agreement not to break down loans into traded and non-traded categories.
With respect to question (e), the AEG agreed that untraded securities should not be reclassified.
| July 2005||9/12/2005||Distinction between loans and deposits|
The AEG agreed that the updated SNA should maintain a distinction between loans and deposits.
The AEG agreed that current international standards do not provide sufficiently clear criteria to make a distinction between loans and deposits. Therefore there should be further consultation with experts to formulate improved operational guidelines to be set out in the updated SNA.