Classification of Financial Instruments
1993 SNA Chapter 11
MFSM Chapter 4
Background
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Review undertaken for BPM update.
Decisions are the result of consultation with
compilers and users:
• Requests for additional detail.
• Developments in financial markets and analysis.
Desire to bring BPM5 more fully into line with other
manuals on detail and terminology.
Compatible with existing SNA (changes only in
presentation and detail).
• but wish to advise AEG; some could be taken up
in SNA.
1993 SNA/MFSM Classification
F.1 Monetary gold and SDRs
F.2 Currency and deposits
Currency
Deposits
Transferable deposits
Other deposits
F.3 Securities other than shares
F.4 Loans
F.5 Shares and other equity
F.6 Insurance technical reserves
Net equity of households in life insurance
reserves
Net equity of households in pension funds
Prepayment of premiums and reserves
against outstanding claims
F.7 Financial derivatives [ADDED IN 2000]
F.8 Other accounts receivable/payable
Trade credit and advances
Other
Question 1 – Broad Outline of
Classification
Interest in DEBT INSTRUMENTS as a grouping.
Major and growing area of economic analysis (debt has different
implications for financial soundness and vulnerability; “balance sheet
approach”).
BPM5 already uses equity/debt/other grouping.
Strong and increasing analytical interest in debt as an grouping.
• Publication of External Debt Guide in 2003; link to total and
domestic debt would be useful.
Possibility to introduce debt concept explicitly in the SNA?
• Already implicit.
• Include definition?; Show as an “of which” item under Total
Financial Assets/Liabilities in the SNA instruments classification?
• If so, any comments on specific instruments to be included under
debt and other headings?
Question 1 – Broad Outline of
Classification
Securities other than shares (1993 SNA term)
Debt securities (BPM5 term)
Some financial derivatives are securities, so the
1993 term became inaccurate after the exclusion
of financial derivatives in 2000.
“Other” is not informative.
No mention of debt, although these instruments all
involve debt.
Question 1 – Broad Outline of
Classification
Links between instrument and corresponding
type of income:
• Useful for rate of return analysis.
• Shows link between balance sheets and income parts of
accounts.
See table in issues paper.
• Note: SNA version would be different.
Presentational, no change in substance.
Possibly useful in SNA?
• Just a suggestion.
Question 2 – Shares and other equity:
Possible additional components
Mutual funds as a standard or supplementary item
under shares and other equity or separately?
Different role in financial process to the rest of
equity because they have an intermediary role.
More like other collective investment schemes
(pensions and life insurance) which are already
shown as separate instruments.
Rapid growth in recent years.
A supplementary item is used here to cover an item that is defined and
discussed in the manual, but that is voluntary, to be included, or not,
according to national circumstances.
Question 2 – Shares and other equity:
Possible additional components
Money market mutual funds (MMMF) as standard or
supplementary item?
Role in monetary statistics
• Although equity, highly liquid and included in
money supply.
Question 2 – Shares and other equity:
Possible additional components
Any other issues?
Question 3 Financial derivatives:
Possible additional components
Interest in additional information on a supplementary basis.
Possibly classified by instrument type:
Forwards (including, e.g., futures and swaps)
Options
Possibly classified by underlying risk category:
Interest-generating (deposits, loans, debt securities)
Equities
Money market and other investment funds shares/units
Other financial units
Commodities
Question 4 Other
Trade-related credit as supplementary item:
trade credit (credit from the seller) is already
identified separately.
trade-related credit (credit from an associated
entity or government) is not.
Any other changes?
Additional issues
There are additional papers on some specific financial
instrument classification issues, which are dealt with in separate
papers:
Reverse transactions;
Traded loans - whether and when they should be reclassified
as securities;
Loans and deposits – the borderline between them; and
Nonmonetary gold and/or gold accounts – whether and when
these are financial assets.