Draft Handbook on National Accounting “Financial Production, Flows and Stocks in the

System of National Accounts”

OECD WP on National Accounts25-28 October 2011,

Paris, France

Herman SmithUNSD/DESA

Outline of the presentation

• Context and purpose of the handbook

• Structure

• Comments on the handbook

• Way forward

Context and purpose (i)

• Joint publication of the UNSD and the Directorate General Statistics of the ECB

• Drafting of the Handbook was initiated in 2004 as part of the United Nations series of handbooks on national accounts

• Work on the Handbook was delayed by further discussions on the measurement of financial services.

• A draft of the Handbook was only circulated in May 2011 to a number of experts for a first review

• Aims to provide a comprehensive guide on the compilation of the full set of the sequence of integrated economic accounts for all sub-sectors of the financial corporations sector, and where applicable also guidance on estimating financial production for moneylenders in the household sector.

• The Handbook includes guidance on the compilation of the interrelationship of the financial stocks and flows for all the institutional sectors and rest of the world (From-Whom-to-Whom approach).

Context and purpose (ii)

• Intended audiences: • National statistical offices,

• National central banks,

• International organisations,

• Other institutions engaged in collecting, compiling and disseminating national accounts data on financial corporations, and

• Users who require a better understanding of these data

Context and purpose (iii)

Structure (i)

Chapter 1 (The SNA architecture)• Overview of the 2008 SNA accounting framework• Valuation and recording principles• Sequence of accounts by institutional sector

Structure (ii)

Chapter 2 (Financial corporations within the SNA framework)

• Description of sub-sectors of financial corporations sector within 2008 SNA framework

• Guidance on other ways to group sub-sectors• Monetary policy purposes• Financial intermediaries, financial auxiliaries, and

other financial institutions• Control (public, private, and foreign controlled)

Structure (iii)

Chapter 3 (Financial production and income)• Nature of financial services and measurement of output• Four main ways in which financial services are

provided and chargeda. Explicit charges

b. Interest charges on loans and deposits

c. Acquisition and disposal of financial assets and liabilities in financial markets

d. Insurance and pension schemes

• A number of worked examples to illustrate (b), (c), and (d), and computation of price and volume measures

• Property income of financial corporations

Structure (iv)

Chapter 4 (Financial assets and liabilities)

• Conceptual treatment of financial assets, claims, and liabilities

• Classification of financial assets and liabilities by• Type of financial instrument

• Negotiability

• Type of income

• Type of interest rate

• Maturity

• Currency

Structure (v)

Chapter 5 (Valuation and accrued interest)

• Valuation of financial assets and liabilities in 2008 SNA• Valuation of stocks

• Revaluations

• Other changes in volume of assets and liabilities

• Valuation of financial transactions

• Accrued interest• Debtor approach and creditor approach of recording

• Worked examples

Structure (vi)

Chapter 6 (From a table on financing and investment to from-whom-to-whom accounts)

• Basics and principles of three-dimensional “from-whom-to-whom” framework

• Allows full articulation of accounts

• Counterparties of transactions can be identified

Structure (vii)

Chapter 7 (Data sources for compiling financial accounts and balance sheets by institutional sector)

• Existing data sources as building blocks

• Need for new data sources

• Compilation of institutional sector accounts

Structure (viii)

Chapter 8 (Presentation of the accounts)

• Tables and charts to present accounts under “from-whom-to-whom” framework

• Presentation of two types of tables on assets and liabilities

a. Without any counterpart information

b. With full counterpart information

• Presentation of data in flow charts or networks

Structure (ix)

Chapter 9 (Use of institutional financial account and balance sheets)

• Use of accounts under “from-whom-to-whom” framework for policy and other purposes including

• Monetary and financial analysis• Analysis of financial structures• Macro-prudential and financial stability analysis

• Examples of quarterly sector accounts

Structure (x)

Chapter 10 (Financial corporations within an economic or a monetary union)

• Compilation of accounts under “from-whom-to-whom” framework within an economic or a monetary union

• Moving from national accounts to economic or monetary union accounts

• Compilation of rest of the world accounts

Meeting in July 2011

• Constructive comments were received from the reviewers of the Handbook and from the participants at the meeting

• Confirmed the need for compilation guidance on the topics covered by the Handbook.

• The importance of consistency between the guidance provide in the Handbook and the recommendations of the 2008 SNA, BPM6, MFSM, GFSM and related manuals was stressed

• More examples and references to source material were requested.

• The outcome of the ISWGNA Task Force on FISIM should also be included in the Handbook

Way forward

• Incorporate the comments on the Handbook and to circulate the revised draft by the end of 2011.

• Set up mechanism for ensuring consistency in the guidance provided in the areas where the Handbook and the MFSM overlap

• The ISWGNA to monitor the updating of the MFSM and the finalisation of the Handbook.

• To incorporate the recommendations of the FISIM Task Force when they become available during 2012.

• To finalise Handbook by the end of 2012

Thank you