1. SNA2008 TREATMENT OF MONETARY GOLD AND SDRS IN THE U.S. FINANCIAL ACCOUNTS PREPARED BY SUSAN HUME MCINTOSH AND ELIZABETH HOLMQUIST WORKING PARTY ON FINANCIAL STATISTICS OCTOBER 25, 2011 OECD, PARIS *The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors.

2. Outline of Presentation U.S. official reserve assets and SDR allocations in the financial accounts Table for transactions Table for outstandings Monetary gold SNA1993 standards SNA2008 changes Table showing current format SDR allocations and holdings SNA1993 standards SNA2008 changes Table showing current format

3. Reserve Assets External assets readily available to and controlled by a countrys authorities for direct financing and regulation of international payments imbalances Include monetary gold, SDR holdings, reserve position in the IMF, and foreign currency holdings Only central bank and central government can hold reserves Reserves must be claims on non-resident

4. U.S. Financial Account Transaction Table (1)Includes federal government liability to IMF for special drawing rights (SDRs) allocations and accrued interest. (2)By international standards, transactions in monetary gold are recorded in the financial account of the domestic sectors as increases (decreases) in assets, and the counterparts are recorded as decreases (increases) in assets of the rest of the world. * Source: Flow of Funds Accounts, September 16, 2011

5. U.S. Financial Account Outstandings Table (1)Includes federal government liability to IMF for special drawing rights (SDRs) allocations and accrued interest. (2)By international standards, monetary gold is a financial asset for which there is no corresponding liability. * Source: Flow of Funds Accounts, September 16, 2011

6. SNA1993 Treatment for Monetary Gold (11.63-11.66) Includes only gold held as a financial asset and as a component of official reserves Financial asset only for central bank or central government Takes the form of coins, ingots, or bars with a purity of at least 995/1000 Purchases (sales) recorded as increases (decreases) in assets of monetary authority and as decreases (increases) of assets of the rest of the world Asset for which there is no outstanding financial liability

7. Changes in SNA2008 for Monetary Gold (11.45-11.46) Recording in the financial accounts remains the same Discusses allocated and unallocated gold accounts The allocated gold account provides title to the physical gold; treated as valuables unless held by monetary authority as reserves The unallocated gold account is a deposit denominated in gold; treated as a deposit unless held with non- residents, then monetary gold Defined as gold to which the monetary authorities have title and is held as a reserve asset and comprises gold bullion (including gold held in allocated gold account) and unallocated gold accounts with non-residents Still has no corresponding liability

8. Monetary Gold (in billions of U.S. dollars) 1960197019802010 Transactions: 1 1. Net change in assets0000 2. Federal government0-1.200 3. Rest of world1.70.800 4. Monetary authority-1.70.400 Outstandings: 2 Total assets:17.811.011.211.0 5. Federal government00.300 6. Monetary authority17.810.711.211.0 (1)Transactions in monetary gold are recorded in the financial account of the domestic sectors as increase (decrease) in assets and the counterparts are recorded as decreases (increases) in assets of the rest of the world. (2)Monetary gold is a financial asset for which there is no corresponding liability.

9. SNA1993 Treatment of SDRs (11.67-11.68) SDRs are international reserve assets created by the IMF and allocated to members. Allocations and cancellations of SDRs are recorded in the other changes in volume account. Transactions are recorded in the financial accounts of the official holder and the rest of world. SDRs are classified as assets without corresponding liabilities (not liability of IMF). Value of SDR determined daily on the basis of a weighted basket of currencies.

10. Changes in SNA2008 for SDRs (11.47-11.49) Allocations of SDRs should be recorded as transactions rather than other changes in volume. Allocations are a liability of the official holder and an asset of the rest of the world. SDR holdings are an asset of the official holder and a liability of the rest of the world. Monetary gold and SDR holdings should be shown as separate transaction subcategories.

11. SDRs Allocations and Holdings (in billions of U.S. dollars) 2007200820092010 Transactions: Net change in liabilities 1. Federal government: SDR allocations0047.60 2. Rest of world: SDR holdings0.20.148.20 Net change in assets 3. Federal government: SDR holdings0.20.148.20 4. Rest of world: SDR allocations0047.60 Outstandings: Total liabilities 5. Federal government: SDR allocations7.77.555.454.4 6. Rest of world: SDR holdings9.59.357.856.8 Total assets 7. Federal government: SDR holdings9.59.357.856.8 8. Rest of world: SDR allocations7.77.555.454.4