|The Australian Bureau of Statistics (ABS) has views on the concepts for recording loans in compiling economic accounts on an SNA basis. The objective of SNA accounts is to capture the economic reality underlying the flows and positions they record, and to do this they rely on some basic principles. The strength and cohesion in SNA93 derives in large part from the application of consistent principles. This paper examines core SNA principles for valuation of loans and other non-tradable instruments. The analysis is extended to cover the specific case of non-performing loans. The conclusion of the ABS is that SNA principles make it essential that all financial assets, including loans, be recorded at market values, with interest flows recorded on an accrual basis based on the market price of the loan and market yields. It is recognised that there is a demand for face value and contractual rates outside the SNA framework, but the ABS believes that the compilation and presentation of these memorandum items must not be allowed to undermine the integrity of the core SNA accounts.
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