## BPM7 Annex 3. Regional Arrangements: Currency Unions, Economic Unions, and Other Regional Statements: Annotated Outline

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**Canonical URL:** [BPM7 Annex 3. Regional Arrangements: Currency Unions, Economic Unions, and Other Regional Statements: Annotated Outline](https://www.imf.org/-/media/files/data/statistics/bmp7/chapters/ao-bpm-ann-3.pdf)

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### I. Introduction
- BPM7 Annex 3 will maintain the BPM6 Appendix 3 structure covering regional arrangements (customs unions, economic unions, and monetary and currency unions) relevant for external sector statistics.
- The annex will include separate sections: Section I (Introduction), Section II (Currency Unions), Section III (Economic Unions), Section IV (Customs Unions), Section V (Other Regional Statements), and Section VI (Numerical Example).
- Further language consistency edits will be made with other macroeconomic statistics manuals (for example, Government Finance Statistics Manual 2014 (GFSM 2014) and Monetary and Financial Statistics Manual and Compilation Guide 2016 (MFSMCG 2016)) as appropriate.

### II. Currency Unions — key updates and methodological clarifications
- Structure retained from BPM6: three sub-sections addressing A3.7 statistical issues.
- A. Definitional Issues
  - Coverage: definition of currency union (CU), currency union central bank (CUCB), regional organizations, definition of a domestic currency in a CU, and distinction between centralized and decentralized CU.
  - Addition: a table on main characteristics of different currency unions based on Annex I, GN B.3 will be added (Table A3.2 Main characteristics of Currency Unions).
- B. Application of Core Balance of Payments Concepts
  - Box A3.1 (Recording of Trade Transactions in Currency and Economic Unions) and core content mostly maintained with updated references to relevant BPM7 chapters.
- C. Issues Related to the Operational Aspects of a Currency Union — updates and clarifications
  - Initial Subscription of the CUCB’s Capital (A3.44)
    - Following GN B.12 and consistent with Section V, Chapter 6, “other investment – other equity” will be renamed “other investment – equity in international organizations and other equity”.
  - Allocation of Seigniorage (A3.47)
    - Seigniorage will be defined following MFSMCG 2016 (footnote 12 to paragraph 6.50) as the net revenue equal to the difference between the nominal value of the currency and the cost of acquisition, distribution, and maintenance of the currency.
  - Treatment of national agencies (NAs) of CUCBs and reserve assets in a centralized union
    - NAs of CUCBs will be treated as institutional units separate from the CUCB headquarters.
    - Transactions among resident units of the same member economy settled through accounts at the CUCB are treated as domestic transactions.
    - NAs have close links with member economies and perform monetary authority functions; complete sets of accounts including balance sheets are available for statistical purposes.
    - Transactions of NAs differ from usual transactions of international organizations; therefore treating NAs as resident institutional units supports evenhanded treatment vis-à-vis economies with independent central banks.
  - Branch identification for nonresident units with substantial operations
    - When a nonresident unit has substantial operations over a significant period in an economic territory but no separate legal entity, a branch may be identified as an institutional unit for statistical purposes (principle applicable to NAs of BCEAO, BEAC, and ECCB).
  - Treatment of regional organizations
    - Regional organizations (including regional development banks such as the Development Bank of Central African States and the West African Development Bank) are treated as nonresident of their member countries; transactions with member countries are external.
    - BPM6 discourages treating branches/offices of regional organizations as residents of their location without strong connection to the domestic economy (production on a significant scale and an economically sensible balance sheet).
  - Scope of CUCB “own account” transactions
    - CUCB own account transactions are those that cannot be attributed to NAs of CUCBs.
    - For the most part, the CUCB balance sheet may be viewed as the sum of the balance sheets of its NAs; own account transactions should be limited to those beyond regular monetary authority operations.
  - Imputed reserve assets (RA) of member economies and the solidarity principle
    - RA of member economies of CEMAC, ECCU, and WAEMU are pooled.
    - WAEMU and CEMAC: member states pool foreign assets in a common foreign exchange reserve fund; in WAEMU there is no national ownership of a share of the common pool.
    - ECCU: member economies own/hold a national share of the common pool of RA.
    - Solidarity principle in WAEMU and CEMAC: each member has full access to the common pool to meet needs irrespective of contributions.
    - In CEMAC, RA attributed to member states are calculated as the sum of foreign exchange reserve components directly recorded in each member state's accounts and items apportioned between member states and the head office; solidarity does not prevent attributing the pool to member economies.
    - Negative positions do not prevent access to the regional reserve pool for valid balance of payments transactions.
    - In WAEMU, imputed RA are not compiled for member states due to strong adherence to the solidarity principle; a box will distinguish CEMAC, ECCU, and WAEMU cases.
  - Guidance on imputed RA where direct apportionment is unavailable
    - Guidance in BPM6 (using net claims on the CUCB to derive imputed RA) will be maintained for CUs without direct accounting apportionment (for example, ECCU at time of writing).
    - Where RA are recorded only in the CUCB balance sheet and imputed RA are not made available due to solidarity principle (for example, WAEMU at time of writing), deviations from the recommendation should be explained in metadata.
    - As noted in Option 1.2 of GN B.3, net claims on CUCB may be recorded as foreign assets in the NA of CUCB for MFS, and under other investment in the national balance of payments and IIP of member states.
  - Statistical treatment of special drawing rights (SDR) allocations for CU members
    - Treatment of SDR allocations/holdings for members of decentralized (euro area) or centralized currency unions (for example, CEMAC, ECCU, WAEMU) is the same as for any other country.
    - SDR holdings and allocations are assets and liabilities of the country member participating in the IMF’s SDR Department.
    - In centralized CUs, SDR allocation/holdings should be attributed to the member country and recorded in the BOP/IIP of the member country.
    - Guidance on imputed reserves applies specifically to foreign exchange reserves; SDRs, reserve position in the IMF, and monetary gold should be recorded in member countries’ BOP/IIP.

### III. Economic Unions
- Section largely maintained as in BPM6 with updated references.
- Consistency will be ensured with Appendix 5, GFSM 2014.
- Coverage: definitional issues and recording issues.

### IV. Customs Unions
- Section largely maintained as in BPM6 with updated references.
- Section title modified from “Customs Arrangements” to “Customs Unions” for consistency.
- Recording variants described (schematic):
  - A designated agency levies, collects, and distributes proceeds from duties.
  - A designated agency levies duties but member economies collect duties.
  - Member economies have collective rights to levy and collect duties.
  - Member economies have collective rights to levy duties, but only one member collects duties.

### V. Other Regional Statements
- Section largely maintained as in BPM6 with no significant changes.
- Coverage: recording principles and specific recording issues for other regional cooperative arrangements.

### VI. Numerical Example: International Transactions and Positions for a Member of a Centralized Currency Union
- Numerical example will be updated based on Annex III, GN B.3.

### Schematic Overview (structure and components)
- I Introduction
- II Currency Unions
  - Table A3.1. Methodological Issues Relevant for Different Types of Regional Cooperation
  - Definitional issues
  - Table A3.2 Main characteristics of Currency Unions
  - Application of core balance of payments concepts
  - Box A3.1. Recording of Trade Transactions in Currency and Economic Unions
  - Issues related to the operational aspects of a currency union (sub-section on centralized currency unions to be updated)
  - Statistical treatment of SDR allocations
- III Economic Unions
  - Definitional issues
  - Recording issues
- IV Customs Arrangements
  - Four recording variants for duty levies/collection and distribution (see above)
- V Other Regional Statements
  - Recording principles
  - Specific recording issues
- VI Numerical Example: International Transactions and Positions in the National Data for a Member Economy of a Centralized Currency Union (to be updated)

### References and Guidance Drawn Upon
- GN B.3 and GN B.12 (guidance notes referenced).
- Government Finance Statistics Manual 2014.
- Monetary and Financial Statistics Manual and Compilation Guide 2016.
- Guidance Note for Fund Staff on the Treatment and use of SDR Allocations.
- How to Record the Allocations of Special Drawing Rights in Government Finance Statistics.
- Statistical Treatment of SDR Allocation: Frequently Asked Questions.

### Key stakeholders consulted
- System of National Account and Balance of Payments Manual editors.
- IMF Statistics Department Financial Institutions Division and Government Finance Division.

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_Source: https://www.imf.org/-/media/files/data/statistics/bmp7/chapters/ao-bpm-ann-3.pdf_