| February 2004||4/27/2004||PROVISIONAL RECOMMENDATIONS ON THE MEASUREMENT OF THE PRODUCTION OF (NON-INSURANCE) FINANCIAL SERVICES
The AEG reviewed the provisional recommendations of the OECD Task Force. It was noted that the recommendations should be regarded as work-in-progress.
Three recommendations were submitted:
• A new definition of financial corporations
• The principle of non-exclusion of own funds in the measurement of output
• A reference rate approach for the measurement of financial intermediation services indirectly measured (FISIM).
The Group discussed the definition at some length. The following comments were made:
• The new definition is broader than the present 1993 SNA treatment, which is a good development.
• The term “financial intermediation” should not disappear from the definition.
The AEG invited the OECD Task Force to produce a comprehensive presentation of all the inter-related issues of sector and industry definition, valuation of output, allocation of output to users, role of own funds, treatment of unincorporated money lenders, and ancillary units such as companies` treasury departments, etc. A small group of AEG members led by Mr. Kulshreshtha will submit a specific proposal to the AEG members on (informal) money lenders in developing countries.
The treatment of Islamic banks should be clarified. The IMF agreed to propose the text.
The AEG agreed that own funds should not be excluded as a source of funds for the provision of financial servics. However, the AEG recommended that the Task Force elaborate further on that.
There was large support for using the reference rate approach in measuring FISIM, although not necessarily using a single rate. Nevertheless, the AEG agreed there is a need to consider alternative approaches as well, since the reference rate approach may not be applicable in many developing countries. The issue of not allocating FISIM will be decided in another AEG meeting.|