## Explanatory Note — Treatment of Cash Collateral in the 2025 SNA and BPM7

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### Background and description of the issue
- Issue discussed in Guidance Note F.10 and subject to split views in the global consultation, the Advisory Expert Group on National Accounts (AEG), and the IMF Committee on Balance of Payments Statistics (BOPCOM).
- AEG (October 2024) and BOPCOM (November 2024) endorsed the proposal in the note Recommendations to Resolve Minor Action Points (Action Point B.4) to leave current treatment unchanged with slight draft amendments to incorporate views expressed by BOPCOM and AEG.
- Existing standards and historical positions:
  - 2008 SNA and BPM6 distinguished “repayable margins” (term to be replaced by “margins” in 2025 SNA and BPM7).
  - BPM6 (paragraph 5.94 (a)) classified “repayable margin payments in cash” as deposits (if the debtor’s liabilities are included in broad money) or in other accounts receivable/payable.
  - 2008 SNA (paragraph 11.124) allowed compiler discretion between deposits and other accounts receivable/payable.
  - ESA 2010 (paragraph 5.136 (d)) required loans for “repayable margins” when claims are on units other than monetary financial institutions, aligning treatment with repos and securities lending with cash collateral.
- Reverse transactions precedent:
  - BPM6 (paragraphs 5.52 and 7.59) and 2008 SNA (paragraph 11.74) treat repos, securities lending with cash collateral, and gold swaps as deposits or loan liabilities for the party receiving cash and corresponding assets for the party transferring cash.
  - Recording as deposits or loans depends on whether the claim is on deposit-taking corporations and is included in broad money (BPM6, paragraphs 5.43 and 5.53; 2008 SNA, paragraphs 11.59, 11.75, and 17.254).
  - MFSMCG 2016 provides consistent recommendations (paragraphs cited).

### Outcome of consultations and editorial decision
- Initial 2021 draft GN F.10 produced split views with no clear majority on classification when debtor liabilities are not included in broad money and/or do not involve deposit-taking corporations; global consultation results were similar.
- Draft GN F.10 proposed flexible compiler discretion to classify margins as deposits, loans, or other accounts receivable/payable; some AEG and BOPCOM members opposed this due to concerns:
  - Setting a precedent for avoiding clear stances.
  - Reducing the value of international guidance.
  - Limiting international comparability.
- 2025 SNA lead editor proposed leaving current treatment unchanged and making slight text amendments to reflect AEG and BOPCOM views (Action Point B.4); AEG and BOPCOM endorsed maintaining the status quo where no agreement exists to change an existing recommendation.
- Consequence of the editorial decision:
  - Loans are eliminated as an option for classifying cash margins for financial derivatives when they are not liabilities of deposit-taking corporations because loans are not listed as an option in both the 2008 SNA and BPM6.
  - The only solution consistent with both 2008 SNA and BPM6 in these cases is classification as other accounts receivable/payable.

### Implementation in the 2025 SNA and BPM7
- Draft 2025 SNA (posted in June) and Draft BPM7 (posted in July) initially reflected the flexible approach; global consultation and AEG/BOPCOM meetings led to adjustments to reflect the endorsed approach.
- Key implemented principles:
  - Cash margins for financial derivatives are always classified as other accounts receivable/payable when they are not liabilities of a deposit-taking corporation.
  - When cash margins are liabilities of a deposit-taking corporation, they are classified as deposits.
  - This treatment applies to other types of cash collateral as well, except for reverse transactions.
  - Reserves held by the factor in a factoring arrangement follow the same deposit / other accounts receivable/payable classification rule (per paragraph 12.87 of Draft 2025 SNA and paragraph 5.XX of Draft BPM7).
  - Supply and receipt of cash under reverse transactions (repos, securities lending with cash collateral, and gold swaps) continue to be treated as deposits (if liabilities of a deposit-taking corporation) or loans (if incurred by other institutions); no change to this recommendation.
- Editorial teams sought to eliminate inconsistencies within and across the 2025 SNA and BPM7 while implementing the endorsed outcome.
- The treatment of cash collateral will be investigated further as part of the research agenda.

### Specific textual and conceptual changes (selected excerpts and paragraph references)
- 12.64: Liabilities under reverse transactions are other deposits when incurred by a deposit-taking corporation and included in loans when incurred by any other institution. Cash margins related to financial derivative contracts and reserves held by a factor are other deposits if liabilities of a deposit-taking corporation and in other accounts receivable/payable if liabilities of any other institution.
- 12.81: Supply and receipt of funds under a securities repurchase agreement, including supply and receipt of margin calls in cash, is treated as a loan or deposit; classified as a deposit if it involves liabilities of a deposit-taking corporation. If no cash is supplied, no loan or deposit is recorded.
- 12.87: Factoring—reserves held by a factor are classified as a deposit (if a liability of a deposit-taking corporation) or other accounts receivable/payable, following recording of cash margins for financial derivatives. Reserve reclassification and factoring income recording principles are specified.
- 12.136: Margins defined; ownership remains with the provider. Cash margins for financial derivatives are classified as deposits (if liabilities of a deposit-taking corporation) or other accounts receivable/payable. Margin placements in non-cash assets require no entries. Maintenance margin calls are not transactions in financial derivatives.
- 14.67, 25.81, 29.21: Cross-references on valuation and inclusion of specific instruments in deposits and loans reiterate classification rules: liabilities under reverse transactions and cash margins (if liabilities of a deposit-taking corporation) are included in other deposits; otherwise included in other accounts receivable/payable.
- BPM7 Annex II edits (paragraphs 5.43, 5.94, 8.39, 5.51, 5.52, 5.73, 5.XX) reflect harmonized language on:
  - Definition and inclusion of other deposits and restricted deposits.
  - Classification of liabilities under reverse transactions.
  - Classification of cash margins and reserves held by a factor.
  - Treatment of repos as loans or deposits depending on involvement of deposit-taking corporations.
  - Factoring treatment and reserve classification.

### Key findings and rules to apply
- Classification rule summary:
  - If cash margins for financial derivatives are liabilities of a deposit-taking corporation → classify as deposits.
  - If cash margins for financial derivatives are not liabilities of a deposit-taking corporation → classify as other accounts receivable/payable.
  - Reverse transactions (repos, securities lending with cash collateral, gold swaps):
    - If liabilities are of a deposit-taking corporation → classify as deposits.
    - If liabilities are of another institution → classify as loans.
  - Reserves held by a factor in factoring arrangements follow the cash-margin classification rule above.
- Terminology change:
  - The 2025 SNA and BPM7 will use the term “margins” instead of “repayable margins” because “nonrepayable margins” is inaccurate and not used by market participants.
- Editorial and comparability considerations:
  - Use “if they are liabilities of a deposit-taking corporation” as the criterion to identify deposits in relation to cash collateral to promote international comparability, recognizing that measures of broad money differ across economies.
  - Glossary refinement: divide “cash” and “cash-equivalent instruments” to ensure precision in defining “margin calls in cash.”

*Explanatory Note — Treatment of Cash Collateral in the 2025 SNA and BPM7, prepared by the 2025 SNA and BPM7 editorial teams.*

### 1.      The treatment of cash collateral in the macroeconomic statistical standards has been

### explanatory-note-treatment-of-cash-collateral-in-the-2025-sna-and-bpm7 - 1.      The treatment of cash collateral in the macroeconomic statistical standards has been

### Background and description of the issue
- The treatment of cash margins for financial derivatives and similar cash collateral has been discussed in the context of Guidance Note (GN) F.10 and was subject to split views in the global consultation, the Advisory Expert Group on National Accounts (AEG), and the IMF Committee on Balance of Payments Statistics (BOPCOM).
- AEG (October 2024) and BOPCOM (November 2024) endorsed a proposal in the note Recommendations to Resolve Minor Action Points (Action Point B.4) to leave the current treatment unchanged with slight draft amendments to incorporate views expressed by BOPCOM and AEG.
- Current standards summary:
  - Cash margins for financial derivatives and similar cash collateral should be treated as deposits if the debtor’s liabilities are included in broad money, and/or they involve the liabilities of a deposit-taking corporation.
  - Uncertainty existed whether such margins should be treated as deposits, loans, or other accounts receivable/payable when the debtor’s liabilities are not included in broad money and/or do not involve liabilities of a deposit-taking corporation.
- Existing standards detail:
  - 2008 SNA and BPM6 distinguish “repayable margins” (term to be replaced by “margins” in 2025 SNA and BPM7).
  - BPM6 (paragraph 5.94 (a)): “Repayable margin payments in cash are classified as deposits (if the debtor’s liabilities are included in broad money) or in other accounts receivable/payable.”
  - 2008 SNA (paragraph 11.124) allowed compiler discretion between deposits and other accounts receivable/payable.
  - ESA 2010 requires loans for “repayable margins” when claims are on units other than monetary financial institutions (paragraph 5.136 (d)), aligning treatment with repos and securities lending with cash collateral.
- Reverse transactions (repos, securities lending with cash collateral, gold swaps):
  - BPM6 (paragraphs 5.52 and 7.59) and 2008 SNA (paragraph 11.74) treat these as deposits or loan liabilities for the party receiving cash (securities lender) and corresponding assets for the party transferring cash (securities borrower).
  - Recording as deposits or loans depends on whether the claim is on deposit-taking corporations and is included in broad money (BPM6, paragraphs 5.43 and 5.53; 2008 SNA, paragraphs 11.59, 11.75, and 17.254).
  - MFSMCG 2016 provides consistent recommendations (paragraphs cited).

### Outcome of consultations and editorial decision
- Initial 2021 discussions of draft GN F.10 produced split views with no clear majority on classification when debtor liabilities are not included in broad money and/or do not involve deposit-taking corporations; this matched global consultation results.
- Draft GN F.10 was updated to propose flexible compiler discretion to classify margins as deposits, loans, or other accounts receivable/payable; some AEG and BOPCOM members opposed this flexible approach.
  - Concerns included: setting a precedent for avoiding clear stances, reducing value of international guidance, and limiting international comparability.
- 2025 SNA lead editor proposed leaving current treatment unchanged and making slight text amendments to reflect AEG and BOPCOM views (Action Point B.4). AEG and BOPCOM endorsed maintaining status quo where no agreement exists to change an existing recommendation.
- Consequence of decision:
  - Loans are eliminated as an option for classifying cash margins for financial derivatives when they are not liabilities of deposit-taking corporations, because loans are not listed as an option in both the 2008 SNA and BPM6.
  - The only solution consistent with both 2008 SNA and BPM6 in these cases is classification as other accounts receivable/payable.

### Implementation in the 2025 SNA and BPM7
- Draft 2025 SNA (posted in June) and Draft BPM7 (posted in July) initially reflected the flexible approach; global consultation and AEG/BOPCOM meetings led to adjustments to reflect the endorsed approach.
- Key implemented principles:
  - Cash margins for financial derivatives are always classified as other accounts receivable/payable when they are not liabilities of a deposit-taking corporation.
  - When cash margins are liabilities of a deposit-taking corporation, they are classified as deposits.
  - This treatment applies to other types of cash collateral as well, except for reverse transactions.
  - Reserves held by the factor in a factoring arrangement follow the same deposit / other accounts receivable/payable classification rule (per paragraph 12.87 of Draft 2025 SNA and paragraph 5.XX of Draft BPM7).
  - Supply and receipt of cash under reverse transactions (repos, securities lending with cash collateral, and gold swaps) continue to be treated as deposits (if liabilities of a deposit-taking corporation) or loans (if incurred by other institutions); no change to this recommendation.
- Editorial teams also sought to eliminate inconsistencies within and across the 2025 SNA and BPM7 while implementing the endorsed outcome.
- The treatment of cash collateral will be investigated further as part of the research agenda.

### Specific textual and conceptual changes reflected in Annex I (selected excerpts)
- 12.64: Liabilities under reverse transactions are other deposits when incurred by a deposit-taking corporation and included in loans when incurred by any other institution. Cash margins related to financial derivative contracts and reserves held by a factor are other deposits if liabilities of a deposit-taking corporation and in other accounts receivable/payable if liabilities of any other institution.
- 12.81: Supply and receipt of funds under a securities repurchase agreement, including supply and receipt of margin calls in cash, is treated as a loan or deposit; classified as a deposit if it involves liabilities of a deposit-taking corporation. If no cash is supplied, no loan or deposit is recorded.
- 12.87: Factoring—reserves held by a factor are classified as a deposit (if a liability of a deposit-taking corporation) or other accounts receivable/payable, following recording of cash margins for financial derivatives. The reserve reclassification and factoring income recording principles are specified.
- 12.136: Margins defined; ownership remains with the provider. Cash margins for financial derivatives are classified as deposits (if liabilities of a deposit-taking corporation) or other accounts receivable/payable. Margin placements in non-cash assets require no entries. Maintenance margin calls are not transactions in financial derivatives.
- 14.67 and 25.81 and 29.21: Cross-references on valuation and inclusion of specific instruments in deposits and loans reiterate classification rules: liabilities under reverse transactions and cash margins (if liabilities of a deposit-taking corporation) are included in other deposits; otherwise included in other accounts receivable/payable.

### Key findings and rules to apply
- Classification rule summary:
  - If cash margins for financial derivatives are liabilities of a deposit-taking corporation → classify as deposits.
  - If cash margins for financial derivatives are not liabilities of a deposit-taking corporation → classify as other accounts receivable/payable.
  - Reverse transactions (repos, securities lending with cash collateral, gold swaps):
    - If liabilities are of a deposit-taking corporation → classify as deposits.
    - If liabilities are of another institution → classify as loans.
  - Reserves held by a factor in factoring arrangements follow the cash-margin classification rule above.
- Terminology change:
  - The 2025 SNA and BPM7 will use the term “margins” instead of “repayable margins” because “nonrepayable margins” is inaccurate and not used by market participants.
- Editorial and comparability considerations:
  - Use “if they are liabilities of a deposit-taking corporation” as the criterion to identify deposits in relation to cash collateral to promote international comparability, recognizing that measures of broad money differ across economies.
  - Glossary refinement: divide “cash” and “cash-equivalent instruments” to ensure precision in defining “margin calls in cash.”

*Explanatory Note — Treatment of Cash Collateral in the 2025 SNA and BPM7, prepared by the 2025 SNA and BPM7 editorial teams.*

### Annex II. Changes to the Draft BPM7

### Annex II. Changes to the Draft BPM7

### Deposits and other deposits (paragraphs 5.43, 5.94, 8.39)
- Other deposits consist of all claims, other than transferable deposits, that are represented by evidence of deposit; they include savings and fixed-term deposits, and nonnegotiable certificates of deposit. Negotiable certificates are classified as debt securities. (See paragraph 5.43.)
- Restricted deposits—those for which withdrawals are restricted on the basis of legal, regulatory, or commercial requirements—are included in other deposits. (See paragraph 5.43.)
- Shares or similar evidence of deposit issued by savings and loan associations, building societies, credit unions, and the like are included in other deposits. (See paragraph 5.43.)
- Liabilities under reverse transactions (e.g., securities repurchase agreements, securities lending with cash collateral, and gold swaps) are:
  - Other deposits when incurred by a deposit-taking corporation.
  - Included in loans when incurred by any other institution. (See paragraph 5.43.)
- Cash margins for financial derivatives and reserves held by the factor in a factoring arrangement are classified as:
  - Other deposits if they are liabilities of a deposit-taking corporation.
  - Other accounts receivable/payable if they are liabilities of any other institution. (See paragraph 5.43 and paragraph 5.94.)
- Reserve position in the IMF (see paragraph 6.85) is included in other deposits. (See paragraph 5.43.)
- Margins are collateral provided to cover potential obligations arising from financial derivatives—especially futures or exchange-traded options—and cash margins for financial derivatives are classified as deposits (if liabilities of a deposit-taking corporation) or other accounts receivable/payable. (See paragraphs 5.94 and 8.39.)
- When a margin is placed in a noncash asset (such as securities), no transaction is recorded because no change in economic ownership has occurred. (See paragraph 5.94.)

### Loans, overdrafts, and reverse transactions (paragraphs 5.51, 5.52, footnotes)
- Loans are financial assets created when a creditor lends funds directly to a debtor and are evidenced by documents that are not negotiable. (See paragraph 5.51.)
- The loans category includes all non-negotiable claims other than deposits entailing fixed cash flows (or cash flows determined by a formula), including those emerging from overdraft facilities, except accounts receivable/payable. (See paragraph 5.51.)
- Loans that have become negotiable and been recorded in debt securities are excluded from loans. (See paragraph 5.51.)
- This loans category includes installment loans, hire-purchase credit, loans to finance trade, factoring claims, and the supply and receipt of cash under reverse transactions if it does not involve liabilities of a deposit-taking corporation. (See paragraph 5.51.)
- Claims on or liabilities to the IMF (including use of IMF credit) that are in the form of loans are included in the loans category. (See paragraph 5.51; see also paragraph 6.85 and Annex 7.1 referenced in paragraph 5.51.)
- An overdraft arising from the overdraft facility of a transferable deposit account is classified as a loan. Undrawn lines of credit are not recognized as a liability. (See paragraph 5.51.)
- A securities repurchase agreement (repo) is a contractual arrangement involving the sale of securities for cash at a specified price with a commitment to repurchase the same or similar securities at a fixed price at a specified future date or an “open” maturity. The supply and receipt of cash under a repo, including supply and receipt of margin calls in cash, is treated as a loan or deposit:
  - Generally treated as a loan.
  - Classified as a deposit if it involves liabilities of a deposit-taking corporation.
  - If a repo does not involve the supply of cash (exchange of one security for another, or supply of a security without collateral), there is no loan or deposit. (See paragraph 5.52.)
- Negotiability is defined in paragraph 5.15. Loans may be traded, but their legal form is not designed for negotiability in the same way as debt securities. (See footnote 7 to paragraph 5.51.)
- The indirect financing by a factor to the debtor is treated as a loan, but it does not generate interest or FISIM. (See footnote 11 to paragraph 5.XX.)

### Factoring (paragraphs 5.XX, footnotes)
- Factoring is a transaction in which a factor (bank, specialized factoring company, or other financial organization) buys trade accounts receivable from a supplier at a discount; it is commonly viewed as a purchase or sale of invoices transferring the legal right of the claim on the debtor to the factor. (See paragraph 5.XX.)
- In factoring, the indirect financing by the factor to the debtor is treated as a loan; the accounts receivable concerned are trade-related receivables arising from the provision of goods, services, or work in progress. (See paragraph 5.XX.)
- Two basic types of factoring:
  - Non-recourse factoring: the factor assumes the full risk of non-payment by the debtors at maturity and may charge the supplier a higher fee. (See paragraph 5.XX.)
  - Recourse factoring: all or part of the risk is kept by the supplier. (See paragraph 5.XX.)
- The factor may keep a reserve that should be paid back to the supplier once the debtor pays its liability in full. The reserve held by a factor is classified as:
  - A deposit if it is a liability of a deposit-taking corporation.
  - Other accounts receivable/payable if it is not a liability of a deposit-taking corporation. (See paragraph 5.XX.)
- The instrument reclassification from trade credit to a loan should be recorded as a transaction in the financial account. (See paragraph 5.XX.)
- The recourse in factoring is seen as a guarantee treated as a contingent liability for the supplier and should not be recorded unless and until activated by the factor. (See paragraph 5.XX.)
- The factoring income is treated as a fee paid by the supplier. (See paragraph 5.XX and footnote 9; see paragraph 11.XX referenced.)

### Other accounts receivable/payable and treatment of fees (paragraph 5.73)
- Other accounts receivable/payable includes items such as liabilities for taxes, purchase and sale of securities, securities lending fees, gold loan fees, wages and salaries, dividends, and social contributions that have accrued but not yet paid; it also includes prepayments of those items. (See paragraph 5.73.)
- Claims arising from cash margins for financial derivatives and reserves held by the factor in a factoring arrangement are included in other accounts receivable/payable if they are not liabilities of a deposit-taking corporation. (See paragraph 5.73.)
- Interest accrued should be recorded with the financial asset or liability on which it accrues, not as other accounts receivable/payable. However, for securities lending and gold loan fees—which are treated as interest by convention—the corresponding entries are included under other accounts receivable/payable rather than with the instrument to which they relate. (See paragraph 5.73 and paragraphs 11.67–11.68 referenced.)

### Classification principles for cash margins and cash collateral (paragraphs 5.94, 8.39)
- Margins are collateral provided to cover potential obligations; ownership of the margin remains with the unit that provided it. (See paragraph 5.94.)
- Cash margins for financial derivatives are classified as deposits (if liabilities of a deposit-taking corporation) or other accounts receivable/payable. (See paragraphs 5.94 and 8.39.)
- When margins are increased or decreased as a result of settling profits/losses by marking to market (often daily or intraday), they are recorded as an increase or decrease in deposits (if liabilities of a deposit-taking corporation) or other accounts receivable/payable with a corresponding entry in a decrease in financial derivative assets or liabilities. (See paragraph 5.94.)
- If a margin falls short of a required level (maintenance margin), an additional margin must be posted; that payment is not to settle a financial derivative contract and should not be recorded in financial derivatives. (See paragraph 5.94.)
- The principles for classifying cash margins for financial derivatives as deposits or other accounts receivable/payable apply generally to all types of cash collateral, except those for reverse transactions (which are recorded as loans or deposits). (See paragraph 5.94.)

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_Source: https://www.imf.org/-/media/files/data/statistics/bpm6/approved-guidance-notes/explanatory-note-treatment-of-cash-collateral-in-the-2025-sna-and-bpm7.pdf_