## BPM7 Chapter 5. Classifications of Financial Assets and Liabilities: Annotated Outline ## Source details **Canonical URL:** [BPM7 Chapter 5. Classifications of Financial Assets and Liabilities: Annotated Outline](https://www.imf.org/-/media/files/data/statistics/bmp7/final-annotated-outlines/bpm7-chapter-5-classification-of-financial-assets-and-liabilities-annotated-outline.pdf) ## Other formats - [Markdown version](/-/media/files/data/statistics/bmp7/final-annotated-outlines/bpm7-chapter-5-classification-of-financial-assets-and-liabilities-annotated-outline.pdf.md) - [Structured JSON version](/-/media/files/data/statistics/bmp7/final-annotated-outlines/bpm7-chapter-5-classification-of-financial-assets-and-liabilities-annotated-outline.pdf.json) --- ### I. Introduction - Chapter 5 of BPM7 will discuss classifications of financial assets and liabilities in external sector statistics.2 - Classifications apply to positions, associated income, financial account transactions, and other changes involving financial assets and liabilities. - Separate sections: definition of assets and liabilities (Section II), classifications by type of instrument (Section III), arrears (Section IV), classification by maturity (Section V), classification by currency (Section VI), and classification by type of interest rate (Section VII). - Ensure consistency of language across external sector statistics, system of national accounts, monetary and financial statistics, and government finance statistics. - A separate annex (new or referenced in Annex 11) should explain different treatments from manuals for other macroeconomic statistics, wherever applicable. - Note: Changes from BPM6 highlighted yellow. ### II. Definition of Economic Assets and Liabilities - A. Assets in General - BPM6 definitions for assets and economic owner will be maintained. - B. Financial Instruments - Financial instruments include assets and other financial instruments (i.e., contingent assets and liabilities) as defined in BPM6. - C. Claims - The definition of a liability will be introduced. The BPM6 definition of a claim and explanation about nonfinancial assets will be maintained. - D. Financial Assets - The BPM6 definition of a financial asset will be maintained. - E. Other Financial Instruments not recognized as financial assets - BPM6 definition of contingent assets and liabilities will be maintained. - Explanation will remain brief because contingent assets and liabilities (including provisions) are not generally recorded in external sector statistics. - Deviation from MFS (which records provisions in the main accounts) will be mentioned in a footnote or Annex and will highlight deviations from manuals for other macroeconomic statistics. - F. Other Issues - Crypto assets: - Define crypto assets and their two categories (those with/without a corresponding liability). - Specify recording in relevant financial instruments3 or nonfinancial assets. - Reference the digital assets framework and link to digital assets decision tree from GN F.18. - Crypto assets will be discussed in Chapter 16 in BPM7 and Chapter 22 in 2025 SNA in more detail. - For crypto assets without corresponding liability, clarification on whether they should be treated as domestic or foreign assets (if deemed financial assets) will be provided in the BPM7 chapter "Residence, Institutional Units and Sectors" based on outcomes of GN F.18. - Reference to BPM7 Chapter 17 on Islamic finance. - Negotiability (discussed in BPM6) will be treated in the debt securities section in BPM7. ### III. Classification of Financial Assets and Liabilities by Type of Instrument - A. Introduction - The current three broad categories in BPM6 (equity, debt, and other) provide useful information for users (e.g., to identify external debt). - B. Equity and Investment Fund Shares - 1. Equity - Equity will include subscription rights. Issuance of subscription rights does not change the residual value of the corporation; detached assets represent part of such residual value; subscription rights should be recognized as equity (F.16). - "Other equity" will be renamed to "equity in international organizations and other equity" to record capital subscriptions to international organizations comprehensively (B.12). - Reserve position in the IMF is recorded in reserve assets, not in other equity. - 2. Investment fund shares or units - C. Debt Instruments - 1. Special Drawing Right - 2. Currency and Deposits - Central bank swap arrangements that do not have characteristics of a standard (market priced) contract are recorded as exchanges of deposits between central banks, with obligation to unwind the operation at a fixed exchange rate on a specified date. - A deposit issued by a central bank and held by the counterpart central bank is denominated in domestic currency but fully linked to a foreign currency; such deposit should be treated as being denominated in foreign currency. - Central bank swaps with a standard (market priced) contract are recorded as standard currency swaps (BOPCOM Clarification Note 5). - Margins and cash collaterals (e.g., those for financial derivatives)—recording to be added in accordance with F.10 (to be approved). - Currency includes central bank digital currencies (F.18). - Deposits include electronic money when liabilities of deposit-taking corporations. For non-deposit taking corporations, apply current BPM6 and 2008 SNA treatment (either deposits or other instruments). - 3. Debt Securities - 4. Loans - Introduce a supplementary item under loans: "of which: repurchase agreements, securities lending with cash collateral, and margin lending" (F.1, F.3, and F.6). - Margins and cash collateral (e.g., those for financial derivatives)—recording to be added in accordance with F.10 (to be approved). - Clarify specific interbank loan positions (e.g., overdrafts in nostro/vostro accounts and cash collateral for repos). - The factoring claim against the debtor is treated as a loan and factoring income as a fee paid by the supplier. Recourse factoring is treated the same as non-recourse factoring. - The instrument reclassification from trade credit to a loan (for the original borrower) should be treated as a transaction in the financial account. - The ideal conceptual treatment of the discount earned by the factor and the convention (treatment as a fee) will be mentioned. - 5. Insurance, Pension, and Standardized Guarantee Schemes - Hybrid insurance products allocated to life or nonlife insurance depending on which features are predominant (F.12). - Autonomous employer-independent schemes or funds can qualify as social insurance pensions if accumulated contributions are set aside for retirement income and are subject to regulation or supervision in line with or similar to employer-related pension schemes/funds (F.12). - Reference to IF.1/Chapter 17 (e.g., Takaful and Re-takaful arrangements) will be added; keep reference to the Appendix on insurance, pension schemes, and standardized guarantees. - 6. Other Accounts Receivable/Payable - Margins and cash collaterals (e.g., those for financial derivatives)—recording to be added in accordance with F.10 (to be approved). - Note: Some items classified as deposits in BPM6/2008 SNA but as loans in the MFS; BPM/SNA could adopt the MFS classification where banks can identify loans and deposits separately.4 - D. Other Financial Assets and Liabilities - 1. Monetary Gold - Paragraph 5.76 (BPM6) will be updated to include pool allocated gold accounts. - Pool allocated gold accounts (a depository sets aside numbered bars into a segregated pool which backs the amount of pool allocated gold the depository owes to their customers) will be treated similar to allocated gold accounts (i.e., classified as monetary gold, when held as reserve assets). - 2. Financial Derivatives and Employee Stock Options - Financial derivatives will be classified by risk category, by instrument, and by trading venue and clearing status as supplementary items. - Emphasize compiling notional values of foreign currency financial derivatives for Table A9-I-1b and 2b of BPM6; market/fair values remain the primary valuation method for BOP and IIP (F.4). - Clarify classifying credit default swaps (CDS) as an option-type contract although they have some characteristics of a forward-type contract (F.5). CDS will be primarily classified by risk category (i.e., credit derivatives) in BPM7 (F.4). - Structures and definitions in following sections will be maintained. ### IV. Arrears - Arrears section retained; no substantive changes specified in the annotated outline. ### V. Classification by Maturity - Clarify definition of remaining maturity (e.g., use debt payments as the basis for remaining maturity classification) in line with BOPCOM Clarification Note 2 and the 2013 External Debt Statistics Guide. ### VI. Classification by Currency - Section retained to classify assets and liabilities by currency. ### VII. Classification by Type of Interest Rate - Section retained to classify assets and liabilities by type of interest rate. ### Schematic Overview (Structure to be maintained) - I. Introduction - II. Definition of Assets and Liabilities - A. Assets in general - B. Financial instruments - C. Claims - D. Financial assets - E. Other financial instruments not recognized as financial assets - F. Other issues - III. Classification of Financial Assets and Liabilities by Type of Instrument - A. Introduction to classification of particular financial assets and liabilities - B. Equity and investment fund shares - 1. Equity - 2. Investment fund shares - C. Debt instruments - 1. Special Drawing Rights - 2. Currency and deposits - 3. Debt securities - 4. Loans - 5. Insurance, pension, and standardized guarantee scheme - 6. Other accounts receivable/payable - D. Other financial assets and liabilities - 1. Monetary gold - 2. Financial derivatives and employee stock options - IV. Arrears - V. Classification by Maturity - VI. Classification by Currency - VII. Classification by Type of Interest Rate ### Key Stakeholders Consulted - System of National Account and Balance of Payments Manual editors - IMF Statistics Department Financial Institutions Division and Government Finance Division --- _Source: https://www.imf.org/-/media/files/data/statistics/bmp7/final-annotated-outlines/bpm7-chapter-5-classification-of-financial-assets-and-liabilities-annotated-outline.pdf_