## BPM7 Chapter 16/2025 SNA Chapter 22. Digitalization: Annotated Outline

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### I. Introduction
- Purpose: elaborate issues arising from digitalization across manuals; provide consolidated definitions, explanations, and concise measurement guidance for products and business models in the digital economy.
- Need: digitalization’s profound impact on production, consumption, trade requires enhanced visibility of digital products and activities in macroeconomic accounts.
- Implications:
  - Changes in classification systems (example: showing computer and information services as a first-level services category in the current account and additional “of which” breakdowns in the balance of payments).
  - Compiling thematic accounts (digital SUTs) and extended accounts for free services.
- Sources to draw on: Guidance Notes DZ.1 (Sections 1 and 2), DZ.5 (Sections 1–4), and C.6.
- Organization: sections on Digital Goods and Services (II); Digital Platforms (III); Digitalization and the Financial System (IV); Measuring Prices and Volumes (V); Analytical Tools including digital SUTs and extended accounts for free digital platforms (VI).

### II. Digital Goods and Services
- Cloud Computing
  - Define cloud computing and hosting services; discuss compilation challenges arising from replacement of ownership of on-premises IT capital stocks by remotely accessed computing services.
  - Guidance to include: determining economic ownership of IT assets; measuring own-account investment in equipment; cross-border transactions in cloud computing services; FDI associated with cloud computing; recording foreign-hosted IT equipment on an ownership basis.
  - Intermediate consumption: distinguishing intermediate consumption of cloud computing services is recommended in the digital SUTs (Section VI) to improve measurement and user information.
  - Investment in long-term licenses for software hosted in the cloud treated as a measurement issue; draw on GNs DZ.3, DZ.6, DZ.7, DZ.8 and the Eurostat-OECD Report on Intellectual Property Products.
  - Draw on GN DZ.8 and cloud computing discussions in GN DZ.1.
- Data Assets
  - Core proposition: data assets are central to many firms’ value and operations in the digital economy.
  - Definition: data defined as an asset produced by accessing and recording observable phenomena (OP).
  - Guidance: capture gross and net investment in data assets and transactions in data copies, including valuation techniques; distinguish data investment from software investment.
  - Recommendation: expand the software and databases category of intellectual property products of the 2008 SNA (paragraph 10.109–10.114) and the SNA production boundary.
  - Draw on GNs DZ.6 and DZ.4.
- Artificial Intelligence (AI)
  - Increase visibility of AI by distinguishing AI software as a special type of software; include intelligent systems in the expanded definition of intellectual property products (2008 SNA, paragraph 10.98).
  - Note: data assets are used to train and update AI software via machine learning (ML); consider boundary between AI software assets and data assets.
  - Draw on GN DZ.7.

### III. Digital Platforms
- Definitions and Classifications
  - Define digital platforms and distinguish them from non-platforms such as e-tailers.
  - Define digital intermediation and identify three types of digital platforms:
    1. non-financial digital intermediation platforms (DIPs) – intermediate transactions in goods and nonfinancial services;
    2. free platforms funded by advertising and collection of users’ OP;
    3. financial DIPs – intermediate funding transactions or payment transactions.
  - Financial DIPs addressed separately in the digitalization and financial system section.
  - Draw on GNs DZ.9, DZ.1, and F.7.
- Nonfinancial Digital Intermediation Platforms (DIPs)
  - Characteristics: generally receive fee income for facilitating transactions and do not take ownership of the transacted good or service.
  - Measurement challenges: delineating services of DIPs versus intermediated activity; prevalence of cross-border transactions and informal suppliers.
  - Recording approach: present the “net approach” to recording these transactions and explain its effect on measurement of cross-border transactions of DIPs.
  - Related changes: Chapter 7 of the new SNA will update definition of margin services (paragraph 6.21) to clarify that margin services exclude digital intermediation services that facilitate changes in ownership of goods.
  - Draw on DZ.9 and C.4.
- Free Digital Platforms and Free Digital Goods and Services
  - Inclusion: explain how free goods and services bundled with marketed outputs are included in current-price GDP.
  - Measurement framework: free platforms funded by advertising and creation of data assets from users’ OPs; guidelines on open-source software and user-generated content.
  - Draw on GN DZ.3 and GN DZ.1 for links to price/volume measurement.
  - Extended account recommendation: a supplementary extended account with an alternative treatment of free digital platforms funded by advertising and collection of users’ OPs (based on GN DZ.4).
    - The alternative treatment reroutes a portion of households’ spending on advertised products to become direct purchases of the platforms’ free services.
    - Recommend inclusion in data assets of:
      (i) the cost of procuring households’ OPs by producing the free services that attract them to the platform, and
      (ii) the value of the user-generated content that households produce with intermediate inputs of the platform’s free services.
  - Valuation note: supplementary information could include using adjusted prices to value bundled free and marked-up items where the price of the marked-up item funds the free item.

### IV. Digitalization and the Financial System
- New financial services and means of payment enabled by digitalization
  - Observation: digitalization has resulted in new financial services and payment mechanisms.
  - Treatment: new and enhanced services fall within existing categories of products and activities but can be shown as “of which” items if important and identifiable.
  - Draw on GN F.7 and BPM7 Chapter 11 “Services Account” for related discussion.
- Digital Financial Services
  - Focus: financial digital intermediation platforms as suppliers of services to facilitate peer-to-peer lending, equity-based crowdfunding, and philanthropic crowdfunding.
  - Distinction: financial digital intermediation services (platform charges fees for facilitating transactions) versus financial intermediation services (intermediary borrows from fund suppliers and lends to fund demanders).
  - Classification: financial DIPs generally receive explicit fees for matching and transaction facilitation services and are financial auxiliaries (S126), not financial intermediaries.
- Crypto Assets and Related Digital Assets
  - Broad classification of fungible crypto assets and related digital assets into:
    (i) those designed to act as a general medium of exchange (with and without corresponding liability);
    (ii) other digital assets such as security tokens.
  - Include a decision tree to distinguish different digital assets based on Annex II.1, GN F.18; note that digital financial assets and crypto assets are partially overlapping categories.
  - Explain roles of distributed ledger technology (DLT) and blockchains in enabling decentralized payment clearing.
  - Distinguish fungible and nonfungible crypto assets; present a typology of fungible crypto assets based on Annex II.2, GN F.18.
  - Classification rules:
    - All fungible crypto assets meet the asset boundary.
    - Fungible crypto assets with a corresponding liability should be recorded as financial assets.
    - The classification of fungible crypto assets designed to act as a general medium of exchange without a corresponding liability (CAWLM) and fungible crypto assets designed to act as a medium of exchange within a platform or network without corresponding liability (CAWLP) is not yet decided; the outline will be updated based on decisions after evaluating responses to the user survey agreed at the joint AEG/BOPCOM meeting in October 2022.
  - Non-fungible tokens (NFTs):
    - Defined as digital records hosted on a blockchain that are associated with a digital or physical asset but distinct from that asset.
    - Classification into:
      (i) those that only grant personal use and display rights;
      (ii) those that grant limited commercial rights;
      (iii) those that grant full ownership rights.
    - Guidelines on recording each NFT category will be presented; recommended treatment as shown in endorsed GN DZ.10.

### V. Measuring Prices and Volumes of Products affected by Digitalization
- Emphasis: many measurement challenges from digitalization involve volumes rather than current-price output.
- Products and activities considered: ICT goods, software and data, cloud computing and other ICT services, DIPs, e-commerce, and free platforms funded by advertising and data collection.
- Measurement issues: frequent appearance of new or improved products and models; customization/variety; bundling; e-commerce.
- Methods suggested:
  - Quality adjustment techniques (hedonics, options pricing, producer costs).
  - Resampling (as defined in the Eurostat Handbook on Price and Volume Measures in National Accounts).
  - Unit value indexes for homogeneous items.
- Assumption: issues in price and volume measurement are covered in more depth in Chapter 18 of the 2025 SNA.
- Sources: GN DZ.1, Eurostat Handbook on Price and Volume Measures in National Accounts, Consumer Price Index Manual: Concepts and Methods (2020), and research papers cited in GN DZ.1.

### VI. Analytical Tools to Increase the Visibility of Digitalization
- Thematic Account on the Digital Economy and Extended Account on Free Digital Products
  - Purpose: the extended account for free digital products and a comprehensive thematic account on the digital economy will help show the impact of digitalization.
  - Thematic account will present alternative aggregations and additional detail developed in digital supply and use tables (SUTs) together with alternative measures of free digital products based on expanded production and consumption boundaries.
- Digital Supply and Use Tables (digital SUTs)
  - Guidelines: compile digital SUTs by adding rows that break out transactions that are digitally ordered or digitally delivered and provide a breakdown of digital products.
  - Added columns to show output, value added, and intermediate consumption of:
    (i) ICT industries;
    (ii) free digital platforms funded by advertising and data collection;
    (iii) non-financial DIPs;
    (iv) firms dependent on DIPs;
    (v) e-tailers;
    (vi) digital only firms providing financial and insurance services;
    (vii) other producers operating only digitally.
  - Priority indicators within digital SUTs include:
    - value added of digital industries;
    - intermediate consumption of digital intermediation services and cloud computing services;
    - digitally ordered transactions.
  - Draw on GN DZ.5 and "Digital Supply-Use Tables: A Step Toward Making Digital Transformation More Visible in Economic Statistics", Going Digital Toolkit Note, No. 8.

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_Source: https://www.imf.org/-/media/files/data/statistics/bmp7/final-annotated-outlines/bpm7-chapter-162025-sna-chapter-22-digitalization-annotated-outline.pdf_