Classification of financial corporations and of financial assets Reimund Mink OECD Working Parties on Financial Statistics and on National Accounts Paris, 10 October 2006

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Structure of the presentation Classification of financial corporations –AEG paper on the classification and terminology for financial corporations –ECB’s proposal for the classification of financial corporations by sub-sector –ISWGNA’s suggestions based on recent discussions Classification of financial assets –Outcome of the world-wide consultation on the classification of financial assets carried out by the ECB –ISWGNA’s suggestions based on recent discussions

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial corporations AEG paper on the classification AEG generally agreed to the proposals –Classify financial corporations into five sub-sectors (monetary financial intermediaries (MFI), investment funds (IF), ICPF, miscellaneous financial intermediaries (MiscFI), and financial auxiliaries (FA)) –Present specific terms in the updated SNA Several changes to the proposals were made –Money market funds (MMF) to be shifted from MFI into IF and shown explicitly –Using the same term to describe an instrument and the controlling institution is confusing –New set of codes as the discretion of the ISWGNA –Distinction between MiscFI and FA –Definition of investment funds issues

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial corporations ECB’s proposal for the classification –Concerns expressed by the ECB’s STC to classify MMF with other types of IF –Treatment of institutional units providing neither financial intermediation nor financial auxiliary services –Holding corporations and other SPEs

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial corporations ECB’s proposal for the classification Table 1: Proposed classification of financial corporations sector by sub-sector *) Financial corporations (S.12) 1. Monetary financial institutions (S.121) Central bank (S.1211) Commercial monetary financial intermediaries (including money market funds) (S.1212) 2. Miscellaneous financial corporations (S.122) Investment funds (without money market funds) (S.1221) Other financial institutions (intermediaries, auxiliaries, and other institutions) (S.1222) 3. Insurance corporations and pension funds (S.123) Insurance corporations (S.1231) Pension funds (S.1232) *) The sector codes used in the table are different to those applied in the 1993 SNA.

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial corporations ISWGNA’s suggestions based on recent discussions –Nine sub-sectors of financial institutions with flexibility on aggregation –Discussion of sub-sectors in chapter 4 –Use of sub-sectors in chapter 25

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial corporations 1. Central bank, as now 2. Deposit-taking corporations other than central bank. This corresponds to “other depository corporations” as now and is a change of terminology only. The change is proposed so that the existing term “depository corporation” can be used in an enlarged sense as explained below. The present split between deposit money corporations and other other depository corporations now seems unnecessary and could be dropped. 3. Money market funds (MMFs) 4. Investment funds, other than MMFs 5. Other financial intermediaries except insurance corporations and pension funds (ICPF) Same title as now but excludes investment funds 6. Financial auxiliaries 7. Other financial institutions, except ICPF. This is a new heading. It would include corporate or quasi-corporate money lenders and may include some SPVs and holding companies 8. Insurance corporations (IC) 9. Pension funds (PF) Nine sub-sectors

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial corporations 1 + 2: Depository corporations : MFI 3 + 4: IF (including MMF) : : Financial intermediaries except insurance corporations and pension funds 6 + 7: 8 + 9: ICPFs Suggested possible combinations

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial assets Outcome of the world-wide consultation on the classification carried out by the ECB –53 responses so far –Main outcome: Show separately monetary gold and SDRs in one category Adopt the convention to classify an asset position of a depository institution as a loan and a liability position as a deposit Interbank position as a sub-category of transferable deposits Split of investment fund shares into money market fund shares and others as standard, no further breakdown No further split of financial derivatives by risk category

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial assets Proposed modified classification Financial asset (transaction)SNA code (transaction) Monetary gold and special drawing rights (SDRs) Monetary gold Special drawing rights F.1 Currency and deposits Currency Transferable deposits* Other deposits F.2 Debt securities Short-term Long-term F.3 Loans Short-term Long-term F.4 *Interbank positions as a subcategory of transferable deposits. **Credit default swaps to cover for guarantees to be indicated within this item.

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial assets Proposed modified classification Table 1: Proposed modified classification of financial assets and liabilities in the 1993 SNA Rev 1 Financial asset (transaction)SNA code (transaction) Equity and investment fund shares Equity Quoted shares Unquoted shares Other equity Investment fund shares/units Money market fund shares/units Other investment fund shares/units F.5 Provisions for insurance, pensions and standardised guarantees Non-life insurance technical provisions Life insurance technical provisions Pension entitlements Provisions for calls under standardised guarantees F.6 *Interbank positions as a subcategory of transferable deposits. **Credit default swaps to cover for guarantees to be indicated within this item.

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial assets Proposed modified classification Financial asset (transaction)SNA code (transaction) Financial derivatives and employee stock options Financial derivatives Options Forwards** Employee stock options F.7 Other accounts receivable / payable Trade credit and advances Other F.8 Memorandum item: Direct foreign investment Equity Loans Other *Interbank positions as a subcategory of transferable deposits. **Credit default swaps to cover for guarantees to be indicated within this item. * Interbank positions as subcategory of transferable deposits ** Credit default swaps to cover for guarantees to be indicated within this item.

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial assets ISWGNA suggestions Financial asset (transaction)SNA code (transaction) Monetary gold and special drawing rights (SDRs) Monetary gold Special drawing rights F.1 Currency and deposits Currency Transferable deposits Interbank positions Other transferable deposits Other deposits F.2 Debt securities* Short-term Long-term F.3 Loans Short-term Long-term F.4 *Interbank positions as a subcategory of transferable deposits. **Credit default swaps to cover for guarantees to be indicated within this item.

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial assets ISWGNA suggestions Table 1: Proposed modified classification of financial assets and liabilities in the 1993 SNA Rev 1 Financial asset (transaction)SNA code (transaction) Equity and investment fund shares** Equity Listed shares Unlisted shares Other equity Investment fund shares/units* Money market fund shares/units Other investment fund shares/units F.5 Insurance, pension and standardised guarantee schemes Non-life insurance technical provisions Life insurance and annuity entitlements Pension entitlements Provisions for calls under standardised guarantees F.6 *Interbank positions as a subcategory of transferable deposits. **Credit default swaps to cover for guarantees to be indicated within this item.

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Classification of financial assets ISWGNA suggestions Financial asset (transaction)SNA code (transaction) Financial derivatives and employee stock options Financial derivatives Options Forwards*** Employee stock options F.7 Other accounts receivable / payable Trade credit and advances Other F.8 Memorandum item: Direct foreign investment Equity Loans Debt securities Trade credit Other *Interbank positions as a subcategory of transferable deposits. **Credit default swaps to cover for guarantees to be indicated within this item. * The listed/unlisted split is relevant for debt securities and investment funds also. ** Reinvested earnings can exist under any of these. *** Credit default swaps to cover for guarantees are included within this item.

Headline, headline Instructions: you may use this slide for the text of your presentation if you wish to highlight parts of your text, you may choose between the above colours as with the title, the font should always be Gill Sans MT, with a font size between 18 and 36 Text, text text, t ext, Text, text, text, for highlighting text, you may use ONE of the following colours: yellow; mustard; orange Text, text text, text, Text, text, text, Thank you