## Treatment of cash collateral

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### Background
- The Guidance Note examines cash collateral transactions—agreements that entail the transfer of cash between two parties to secure credit exposures or other risks.
- Cash collateral contexts include securities lending operations, clearing and settlement mechanisms, brokerage agreements, guarantees to governments, certain collateralized payables, bankruptcy proceedings, escrow accounts in real estate transfers, and other contexts.
- The Guidance Note focuses on deals where the party making the cash payment retains a claim against the party that receives the payment; it excludes cash transfers made to settle acquisitions of third-party assets or to offset net liability positions where no collateral and no claim arise.
- The Guidance Note excludes segregation of cash assets in bankruptcy proceedings subject to court or creditor authorization, because no market transaction occurs and the assessment of economic ownership falls outside the scope.
- Examples distinguished: investors' cash to margin accounts with brokers after declines in securities value (included) versus payments to settle acquisitions of securities or variation margin (excluded).
- Existing standard treatments summarized:
  - Securities lending with cash collateral: treated like repurchase agreements, recorded as a deposit or loan liability for the party receiving cash and a corresponding asset for the party transferring cash; classification depends on whether the claim is included in broad money (BPM6 and 2008 SNA references).
  - Gold swaps: treated analogously to repurchase agreements, either as loans or deposits.
  - Repayable margins in financial derivatives: classified as deposits if included in monetary aggregates; otherwise BPM6 prescribes other accounts receivable/payable while 2008 SNA allows compiler discretion between deposits or other accounts receivable/payable.
  - ESA 2010: requires recording loans for "repayable margins" in financial derivatives when claims are on units other than monetary financial institutions, marking a departure from SNA.
  - Repo market margin calls: guidance treating them as loans exists, but BPM6, paragraph 5.94 introduces wording implying the derivatives margins principles apply generally, creating a drafting conflict.
- Standards currently lack comprehensive guidance on generic pledging of cash collateral (for example, collateralized guarantees from banking resolution contributions, deposit guarantee schemes, escrow accounts).
- Objective: provide a comprehensive and consistent (not necessarily uniform) treatment of cash collateral in international standards to resolve partial, inconsistent, or ambiguous guidance across manuals and within manuals.

### Issues for discussion
- Core issue: classification of claims arising from transferring cash to secure credit exposures; similar cash payments that settle acquisitions or offset liabilities do not give rise to claims.
- Question whether cash provided for generic margin calls could be recorded as a reduction of the credit exposure secured; repo margin calls might be seen as reducing the repo seller's liability but contractual terms (for example, differing interest rates on cash collateral versus repo/rebate rates) usually distinguish the cash collateral claim as separate.
- Existing methodological guidance tends to classify claims as deposits when corresponding liabilities are part of the money definition, supporting deposit treatment as a general rule for cash collateral transactions.
- Recommendation to amend BPM6, paragraph 5.53 and 2008 SNA, paragraph 11.75 wording to avoid interpreting repo margin calls as loans in all cases.
- Current inconsistency when liabilities are not classified in money aggregates:
  - Securities lending with cash collateral and repo margin calls: often treated as loans (BPM6, paragraph 5.53; 2008 SNA, paragraph 11.75).
  - Repayable margins in derivatives: BPM6 prescribes other accounts receivable/payable (paragraph 5.94 (a)); 2008 SNA allows deposits or other accounts receivable/payable (paragraph 11.124); ESA 2010 prescribes loans (paragraph 5.136 (d)).
- The Guidance Note considers three instrument-classification options for claims arising from cash transfers securing risk exposures where liabilities are not in monetary aggregates; collateral agreements that lead to liabilities of deposit-taking corporations are excluded because such liabilities are classified as deposits in all cases.

### Option 1: Other accounts receivable/payable
- Description:
  - Current treatment in BPM6 and 2008 SNA; would require minimum wording changes though 2008 SNA would need modification of the definition of other accounts payable/receivable.
  - Based on interpreting loans and deposits as applying only where there is a clear intention of raising or placing funds; transactions motivated by securing risk exposures would be other accounts.
- Implication for securities lending with cash collateral:
  - Securities lending with cash collateral would still be treated as loans given repos and securities lending against cash are substitutes—thus loans remain for these specific cases unless repos are re-examined.
- Implementation requirements:
  - Resolve the drafting conflict on margin calls in cash under repos (BPM6, paragraph 5.53 and 2008 SNA, paragraph 11.75 versus BPM6, paragraph 5.94).
  - Link classification of cash collateral as deposits to liabilities of depository institutions only, and extend other-accounts treatment to generic cash collateral transactions.
  - Modify the definition of other accounts to encompass the treatment.

### Option 2: Loans
- Rationale:
  - Claims associated with cash payments to secure exposures have features aligned with loans as described in BPM6, paragraph 5.51 and 2008 SNA, paragraph 11.72 (provision of funds with absence of negotiability); purpose of provision deemed largely irrelevant.
  - Focus on economic effect rather than economic purpose, analogous to not distinguishing financial derivatives by purpose.
  - Builds on established treatment of securities lending with cash collateral and repos as loans; funding motivation may be absent in some repos/securities-lending transactions but economic effect can justify loan classification.
- Economic logic:
  - Margin calls re-establish equilibrium in value between funds and pledged assets; either party can be collateral provider, but risks and rewards remain with the unit assigned economic ownership.
- Counterarguments and considerations:
  - Classifying claims as other accounts could conflict with cash-flow nature; other payables are typically linked to timing differences between ownership changes and payments and would require definitional changes.
  - Cash collateral arrangements often include interest payments to the party constituting the deposit; 2008 SNA, paragraph 17.236 suggests assets making regular interest payments should be classified as loans, though BPM6 and ESA 2010 lack a similar requirement.
  - Option 2 aligns with the possible convention in BPM6, paragraph 5.40 extending loan treatment when one party is a deposit-taking corporation and the other is not, but sector-based delineation between loans and deposits is not straightforward (for example, central governments can generally have deposit liabilities).
- Implementation implications:
  - Amend handbooks to include generic provisions on cash collateral beyond current specific cases.
  - Change current treatment of "repayable margins" in financial derivatives (BPM6, paragraph 5.94a; 2008 SNA, paragraph 11.124) to prescribe classification of arising claims as loans when the claim is not part of money aggregates or when liability is not issued by units whose liabilities are part of the money definition.
  - This would eliminate direct conflicts across manuals but may not reflect the instrument's nature (intent not to fund the other party) and would not achieve consistency with monetary aggregate statistics.

### Option 3 (Proponents' position)
- Core proposition:
  - Do not distinguish instrument class on the basis of the sector of the debtor.
  - Inclusion in monetary aggregates is a “sufficient condition” for classifying claims as deposits and not a “necessary condition”.
  - Distinguishing instrument class by debtor sector would be highly distortive given market practices where margining requirements cover various contracts and counterparties and would prevent netting of bilateral margining obligations across instruments.
- Legal/evidentiary basis:
  - Obligations and cash flow structures in these transactions are sufficiently similar to deposits as defined in the standards; the Collateral Arrangement Agreement (CAA) is seen as representing “evidence of deposit” as required in 2008 SNA, paragraph 11.59 and BPM6, paragraph 5.39.
  - Creditor initiative to recuperate funds by stopping the action requiring depositing is a feature distinguishing deposits from loans.
- Scope and implications:
  - Securities lending with cash collateral, repos and associated margin calls would be considered separately.
  - Option 3 would require changing current provisions on margins in financial derivatives and introducing standards on generic cash collateral obligations; it would eliminate inconsistencies similar to Option 2 but would not overrule compilers choosing to follow BPM6, paragraph 5.40.
- Instrument-identification proposal:
  - FITT proposed creating a new instrument subcategory (AF.X8) under AF.4, AF.8, or AF.2 (depending on first-digit level decision) to cover margins and cash collateral, allowing separate identification for analytical purposes, while noting increased compilation burden.

### FITT assessment and technical conclusions
- FITT unanimous technical assessment (among members who expressed an opinion) concluded features of claims from pledging cash collateral align with deposits in the standards: they constitute non-negotiable claims represented by evidence of deposits (the CAAs).
- The MFSMCG definition of deposits (paragraph 4.29) allows debtors other than deposit-taking corporations (including central government) to incur deposit liabilities.
- Classification as loans (Option 2) judged not appropriate due to absence of a funding intention; loan definition cited: "loans are financial assets that are created when a creditor lends funds to a debtor" (BPM6, paragraph 5.51 and 2008 SNA, paragraph 11.72).
- Classification as other receivable/payable (Option 1) judged not appropriate because CAAs provide evidence of deposits and these claims are not linked to timing differences between acquisition of assets/products and associated payments (2008 SNA, paragraphs 17.294 and 17.296).
- Exception: securities lending with cash collateral would in principle be treated as loans, due to equivalence to repos which are consistently classified as loans where funding purpose is more prominent.
- FITT noted potential conflicts with conventions associating deposits to monetary aggregates (2008 SNA, paragraph 11.124) and with BPM6, paragraph 5.40 used extensively in Europe and ESA 2010 paragraph 5.79.

### Global consultation, AEG/BOPCOM discussion, and stakeholder views
- Global consultation: respondents split on classifying all cash-collateral-related liabilities as deposits — seven supported the proposal while nine did not.
  - Of seven supporters, five indicated deposit-taking and other financial corporations and other institutional sectors (for example, nonfinancial corporations) should be allowed to record deposit liabilities for cash collateral.
  - Of nine who did not support, five preferred recording cash collaterals in accounts payable/receivable and four preferred recording them in loans.
- On introducing a new sub-instrument category to cover cash collateral, six supported and ten did not; the majority judged additional reporting/compilation burden unjustified.
- BOPCOM expressed mixed views and did not support introducing a new sub-instrument category.
- Arguments in favor of Option 3: cash collateral fits the concept of deposits (including counterparty risk) and lacks characteristics of loans; common treatment across institutional units is feasible and other sectors can take deposits.
- Arguments in favor of Option 2: cash collateral shares commonalities with loans, lacks dimensions for deposits (standardization, non-negotiability, intention of placing funds); loan classification used for similar borderline cases (repos and securities lending); loan treatment considered easier to implement, understand, and harmonize, with references to ESA 2010 and BPM6 paragraph 5.40.
- AEG expressed opposing views including for units not usually included in monetary aggregates, with a slight preference not to change current SNA guidance.

### Final outcome, decisions, and recommended treatment (2025 SNA and BPM7)
- Given split global consultation, AEG and BOPCOM views, the 2025 SNA lead editor proposed leaving current treatment unchanged with slight text amendments to incorporate AEG and BOPCOM views; the proposal was endorsed as part of Recommendations to Resolve Minor Action Points (Action Point B.4).
- Consequences of keeping current standards unchanged:
  - Loans are eliminated as an option for classifying cash margins in the context of financial derivatives when they are not liabilities of a deposit-taking corporation because this is not listed as an option in the 2008 SNA or BPM6.
  - Because 2008 SNA mentions both deposits and other accounts receivable/payable while BPM6 only mentions other accounts receivable/payable, the only solution consistent with both 2008 SNA and BPM6 is other accounts receivable/payable; this offers clear guidance without leaving classification to individual compilers' discretion.
- To promote international consistency, the treatment also applies to other types of cash collateral, except reverse transactions; reserves held by the factor in a factoring arrangement are treated as deposits (when liabilities of a deposit-taking corporation) or other accounts receivable/payable as indicated in Draft 2025 SNA and Draft BPM7.
- 2025 SNA and BPM7 will continue to treat supply and receipt of cash under reverse transactions (for example, repos, securities lending with cash collateral, and gold swaps) as deposits (when liabilities of a deposit-taking corporation) or loans; this is consistent with 2008 SNA and BPM6 and no decision has been taken to change it.
- Concluding recommended treatment (for 2025 SNA and BPM7):
  - Cash margins for financial derivatives should always be classified as other accounts receivable/payable when they are not liabilities of a deposit-taking corporation.
  - When they are liabilities of a deposit-taking corporation, they should be classified as deposits.
  - This treatment applies to other types of cash collateral (except reverse transactions), including reserves held by the factor in a factoring arrangement.
  - Supply and receipt of cash under reverse transactions should be classified as deposits (if liabilities of a deposit-taking corporation) or loans.
  - The treatment of cash collateral will be investigated further as part of the research agenda.

*Source: IMF guidance note (paragraphs 26–52).*

### SECTION I: THE ISSUE

### SECTION I: THE ISSUE

### BACKGROUND
- The Guidance Note examines the treatment of cash collateral transactions—agreements that entail the transfer of cash between two parties to secure credit exposures or other risks (paragraph 1).
- Cash collateral transactions occur in securities lending operations, clearing and settlement mechanisms, brokerage agreements, guarantees to governments, certain collateralized payables, bankruptcy proceedings, escrow accounts in real estate transfers, and other contexts (paragraph 1).
- The Guidance Note focuses on deals where the party making the cash payment retains a claim against the party that receives the payment; it excludes cash transfers made to settle acquisitions of third-party assets or to offset net liability positions where no collateral and no claim arise (paragraph 2).
- The Guidance Note excludes segregation of cash assets in bankruptcy proceedings subject to court or creditor authorization, as no market transaction occurs and economic ownership treatment falls outside the assessment (paragraph 3).
- Examples include investors' provisions of cash to "margin accounts" with brokers after declines in value of securities acquired "on margin". Payments made to settle acquisitions of securities (e.g., "cash accounts" or due to "variation margin") are not part of the transactions examined (paragraph 4).
- Existing standards and their current treatments:
  - Securities lending with cash collateral: treated like repurchase agreements, leading to the recording of a deposit or loan liability for the party receiving cash and a corresponding asset for the party transferring cash; classification depends on whether the claim is included in broad money (BPM6, paragraphs 5.52 and 7.59; 2008 SNA, paragraph 11.74; BPM6, paragraphs 5.43 and 5.53; 2008 SNA, paragraphs 11.59, 11.75, and 17.254) (paragraph 5).
  - Gold swaps: treated analogously to repurchase agreements, either as loans or deposits (BPM6, paragraph 5.55; 2008 SNA, paragraph 11.77) (paragraph 5).
  - Repayable margins in financial derivatives: classified as deposits if included in monetary aggregates; otherwise BPM6 prescribes other accounts receivable/payable, while 2008 SNA allows compiler discretion between deposits or other accounts receivable/payable (BPM6, paragraphs 5.94 (a) and 8.39; 2008 SNA, paragraphs 11.59, 11.124, and 13.57) (paragraph 6).
  - ESA 2010: requires recording loans for "repayable margins" in financial derivatives when claims are on units other than monetary financial institutions (ESA 2010, paragraph 5.136 (d))—a departure from SNA (paragraph 7).
  - Margin calls in cash in the repo market: standards include guidance treating them as loans (BPM6, paragraph 5.53 and 2008 SNA, paragraph 11.75), but BPM6, paragraph 5.94 introduces wording implying the principles for derivatives margins apply generally, creating a drafting conflict (paragraph 8).
- Standards lack guidance on generic pledging of cash collateral (e.g., collateralized guarantees from banking resolution contributions, deposit guarantee schemes, escrow accounts), leaving gaps (paragraph 9).
- Objective: provide a comprehensive and consistent, albeit not necessarily uniform, treatment of cash collateral in international standards to resolve partial, inconsistent, or ambiguous guidance across manuals and within manuals (paragraph 10).

### ISSUES FOR DISCUSSION
- Core issue: classification of claims arising from transferring cash to secure any kind of credit exposure; similar cash payments that settle acquisitions or offset liabilities do not give rise to claims (paragraph 11).
- Question whether cash provided for generic margin calls could be recorded as a reduction of the credit exposure secured; repo margin calls might be seen as reducing the repo seller's liability but contractual terms (e.g., differing interest rates on cash collateral versus repo/rebate rates) usually distinguish the cash collateral claim as separate (paragraph 12).
- Existing methodological guidance tends to classify claims as deposits when corresponding liabilities are part of the money definition; this supports setting deposit treatment as a general rule for cash collateral transactions (paragraph 13).
- Recommendation to amend BPM6, paragraph 5.53 and 2008 SNA, paragraph 11.75 wording to avoid interpreting repo margin calls as loans in all cases (paragraph 13).
- Current inconsistency: for liabilities not classified in money aggregates—
  - Securities lending with cash collateral and repo margin calls: often treated as loans (BPM6, paragraph 5.53; 2008 SNA, paragraph 11.75) (paragraph 14).
  - Repayable margins in derivatives: BPM6 prescribes other accounts receivable/payable (paragraph 5.94 (a)); 2008 SNA allows deposits or other accounts receivable/payable (paragraph 11.124); ESA 2010 prescribes loans (paragraph 5.136 (d)) (paragraph 14).
- The Guidance Note considers three options for overreaching instrument classification of claims arising from cash transfers securing risk exposures where liabilities are not in monetary aggregates; collateral agreements that lead to liabilities of deposit-taking corporations are excluded because such liabilities are classified as deposits in all cases (paragraph 15).

### OPTION 1: OTHER ACCOUNTS RECEIVABLE/PAYABLE
- Description:
  - Current treatment in BPM6 and 2008 SNA; minimum changes required in wording though 2008 SNA would need modification of the definition of other accounts payable/receivable (paragraph 16).
  - Based on the interpretation that loans and deposits apply only where there is clear intention of raising or placing funds; transactions motivated by securing risk exposures would be other accounts (paragraph 16).
- Implication for securities lending with cash collateral:
  - Securities lending with cash collateral would still be treated as loans given repos and securities lending against cash are substitutes—thus loans remain for these specific cases unless repos are re-examined (paragraph 17).
- Implementation requirements:
  - Resolve drafting conflict on margin calls in cash under repos (BPM6, paragraph 5.53 and 2008 SNA, paragraph 11.75 versus BPM6, paragraph 5.94) (paragraph 18(i)).
  - Link classification of cash collateral as deposits to liabilities of depository institutions only, and extend other-accounts treatment to generic cash collateral transactions (paragraph 18(ii)).
  - Modify the definition of other accounts to encompass the treatment (paragraph 18(iii)).

### OPTION 2: LOANS
- Rationale:
  - Claims associated with cash payments to secure exposures have features aligned with loans as described in BPM6, paragraph 5.51 and 2008 SNA, paragraph 11.72 (provision of funds with absence of negotiability); purpose of provision deemed largely irrelevant (paragraph 19).
  - Focus on economic effect rather than economic purpose, analogous to not distinguishing financial derivatives by purpose (paragraph 20).
  - Builds on established treatment of securities lending with cash collateral and repos as loans; funding motivation may be absent in some repos/securities-lending transactions but economic effect can justify loan classification (paragraph 20).
- Economic logic:
  - Margin calls serve to re-establish equilibrium in value between funds and pledged assets; either party can be collateral provider, but risks and rewards remain with the unit assigned economic ownership (paragraph 21).
- Counterarguments to Option 1:
  - Classifying these claims as other accounts receivable/payable could conflict with the nature of cash flows; other payables are typically linked to timing differences between ownership changes and payments, and would require definitional changes to other accounts (paragraph 22).
- Interest payments consideration:
  - Cash collateral arrangements often include interest payments to the party constituting the deposit; 2008 SNA, paragraph 17.236 suggests assets making regular interest payments should be classified as loans, though BPM6 and ESA 2010 lack a similar requirement (paragraph 23).
  - Suggestion that manuals examine and clarify links between periodic interest payments and classification as loans versus other payables (paragraph 23).
- Alignment with conventions:
  - Option 2 aligns with the possible convention in BPM6, paragraph 5.40: when one party is a deposit-taking corporation and the other is not, an asset position of a deposit-taking corporation may be classified as a loan by both parties; Option 2 would extend this convention to a compulsory treatment for claims on non deposit-taking corporations (paragraph 24).
  - Drawback: central governments can generally have deposit liabilities, so sector-based delineation between loans and deposits is not straightforward (paragraph 24).
- Implementation implications:
  - Change handbooks to include generic provisions on cash collateral beyond the specific cases currently treated.
  - Change current treatment of "repayable margins" in financial derivatives (BPM6, paragraph 5.94a; 2008 SNA, paragraph 11.124) to prescribe classification of arising claims as loans when the claim is not part of money aggregates or when liability is not issued by units whose liabilities are part of the money definition (paragraph 25).
  - This would eliminate direct conflicts across manuals and address indirect conceptual discrepancies, but may not reflect the instrument's nature (intent not to fund the other party) and would not achieve consistency with monetary aggregate statistics (paragraph 25).

*Guidance Note prepared by Celestino Girón, Branimir Gruic, Patrick McGuire, Anne Mulkay, Philippe de Rougemont, and Laura Wahrig.*

### 26.      The proponents of this option do not see necessary to make a distinction of instrument

### f10-treatment-of-cash-collateral - 26.      The proponents of this option do not see necessary to make a distinction of instrument

### Proponents' position (Option 3)
- Proponents do not see it necessary to make a distinction of instrument class on the basis of the sector of the debtor (paragraph 26).
- Convention that non-negotiable liabilities included in the monetary aggregates should be classified under deposits is accepted, but inclusion in monetary aggregates is a “sufficient condition” for classifying claims as deposits and not a “necessary condition” (paragraph 26).
- Distinguishing instrument class by debtor sector would be highly distortive given market practices where margining requirements cover various contracts and counterparties (paragraph 27).
- Distinction would prevent netting because standards generally do not allow netting across different instruments; bilateral margining obligations on OTC derivatives ideally should be netted between the same parties in national accounts and balance of payments to prevent inflating balance sheets (paragraph 27).
- Obligations and cash flow structures in these transactions are sufficiently similar to deposits as defined in the standards; the Collateral Arrangement Agreement (CAA) is seen as representing “evidence of deposit” as required in the 2008 SNA, paragraph 11.59 and BPM6, paragraph 5.39 (paragraph 28).
- Creditor initiative to recuperate funds by stopping the action requiring depositing is a feature distinguishing deposits from loans (paragraph 29).
- Securities lending with cash collateral, repos and associated margin calls would be considered separately (paragraph 30).
- Option 3 would require changing current provisions on margins in financial derivatives and introducing standards on generic cash collateral obligations; it would eliminate inconsistencies similar to Option 2 but would not overrule compilers choosing to follow BPM6, paragraph 5.40 (paragraph 31).

### FITT assessment and technical conclusions
- It is difficult to argue that economic substance of similar collateral arrangements changes solely by which agents are involved; maintaining separate treatments based on inclusion in monetary aggregates or deposit-taking status would be artificial and prevent netting of bilateral claims of the same nature (paragraph 32).
- FITT technical assessment (unanimous among members who expressed an opinion) concludes that features of claims from pledging cash collateral align with deposits in the standards: they constitute non-negotiable claims represented by evidence of deposits (the CAAs). The definition of deposits in paragraph 4.29 of the Monetary and Financial Statistics Manual and Compilation Guide (MFSMCG) allows debtors other than deposit-taking corporations (central government) to incur deposit liabilities (paragraph 33).
- Classification as loans (Option 2) was judged not appropriate due to absence of a funding intention; purpose of cash placements is securing risk exposures, not lending funds (paragraph 34). The loan definition cited: "loans are financial assets that are created when a creditor lends funds to a debtor" (BPM6, paragraph 5.51 and 2008 SNA, paragraph 11.72) (paragraph 34).
- Classification as other receivable/payable (Option 1) also not appropriate because CAAs provide evidence of deposits and because these claims are not linked to timing differences between acquisition of assets/products and associated payments, a common feature of other accounts receivable/payable (2008 SNA, paragraphs 17.294 and 17.296) (paragraph 35).
- Exception: securities lending with cash collateral would in principle be treated as loans, due to equivalence to repos which are consistently classified as loans where funding purpose is more prominent (paragraph 36).
- Some FITT respondents did not support excluding units not typically associated with issuing deposits; respondents varied between no exemption, limited number, and very limited exclusions possibly circumscribed to households' liabilities only (paragraph 37).
- FITT recognized Option 3 could contradict common association of deposits to monetary aggregates (2008 SNA, paragraph 11.124) and might conflict with convention in BPM6, paragraph 5.40 used extensively in Europe; ESA 2010 paragraph 5.79 defines deposits as "standardized, non-negotiable contracts with the public at large, offered by deposit-taking corporations and, in some cases, by central government as debtors" (paragraph 38).
- FITT proposed creating a new instrument subcategory (AF.X8) under AF.4, AF.8, or AF.2 (depending on first-digit level decision) to cover margins and cash collateral, allowing separate identification for analytical purposes, while noting increased compilation burden (paragraphs 39–40).
- FITT suggested reexamining the specific case of cash collateral pledging to secure repurchase agreements/securities lending following possible adoption of Option 3 for generic cash-collateral claims (paragraph 41).

### Global consultation, AEG/BOPCOM discussion, and stakeholder views
- Global consultation: respondents split on classifying all cash-collateral-related liabilities as deposits — seven supported the proposal while nine did not (paragraph 42).
  - Of seven supporters, five indicated deposit-taking and other financial corporations and other institutional sectors (e.g., nonfinancial corporations) should be allowed to record deposit liabilities for cash collateral (paragraph 42).
  - Of nine who did not support, five preferred recording cash collaterals in accounts payable/receivable and four preferred recording them in loans (paragraph 42).
- On introducing a new sub-instrument category to cover cash collateral, six supported and ten did not; majority judged additional reporting/compilation burden unjustified (paragraph 43).
- BOPCOM expressed mixed views and did not support introducing a new sub-instrument category (paragraph 44).
- Arguments in favor of Option 3 from some members: cash collateral fits concept of deposits (including counterparty risk) and lacks characteristics of loans; common treatment across institutional units is feasible and other sectors can take deposits (paragraph 45).
- Arguments in favor of Option 2 (loans) from other members: cash collateral presents commonalities with loans, lacks important dimensions for deposits (standardization, non-negotiability, intention of placing funds), loan classification used for other borderline cases (repos and securities lending); loan treatment considered easier to implement, understand, and harmonize, with references to ESA 2010 and BPM6 paragraph 5.40 (paragraph 46).
- AEG expressed opposing views including for units not usually included in monetary aggregates, with a slight preference not to change current SNA guidance (paragraph 47).

### Final outcome, decisions, and recommended treatment (2025 SNA and BPM7)
- Due to split views in global consultation, AEG and BOPCOM, the 2025 SNA lead editor proposed to leave current treatment unchanged and include slight text amendments to incorporate AEG and BOPCOM views; proposal was endorsed as part of Recommendations to Resolve Minor Action Points (Action Point B.4). Status quo is maintained where AEG and BOPCOM cannot reach agreement; editorial teams should attempt to eliminate inconsistencies within and between standards (paragraph 48).
- Decision to keep current standards unchanged means:
  - Loans are eliminated as an option for classifying cash margins in the context of financial derivatives when they are not liabilities of deposit-taking corporations because this is not listed as an option in the 2008 SNA or BPM6 (paragraph 49).
  - 2008 SNA mentions both deposits and other accounts receivable/payable; BPM6 only mentions other accounts receivable/payable as an option; thus the only solution consistent with both 2008 SNA and BPM6 is other accounts receivable/payable (paragraph 49).
  - This option offers clear guidance without leaving classification to individual compilers' discretion (paragraph 49).
- To promote international consistency, the treatment also applies to other types of cash collateral, except reverse transactions; reserves held by the factor in a factoring arrangement are treated as deposits (when liabilities of a deposit-taking corporation) or other accounts receivable/payable as indicated in the Draft 2025 SNA and Draft BPM7 (paragraph 50).
- 2025 SNA and BPM7 will continue to treat supply and receipt of cash under reverse transactions (e.g., repos, securities lending with cash collateral, and gold swaps) as deposits (when liabilities of deposit-taking corporations) or loans; this is consistent with 2008 SNA and BPM6 and no decision has been taken to change it (paragraph 51).
- Concluding statement for 2025 SNA and BPM7 (paragraph 52):
  - Cash margins for financial derivatives should always be classified as other accounts receivable/payable when they are not liabilities of a deposit-taking corporation.
  - When they are liabilities of a deposit-taking corporation, they should be classified as deposits.
  - This treatment applies to other types of cash collateral (except reverse transactions), including reserves held by the factor in a factoring arrangement.
  - Supply and receipt of cash under reverse transactions should be classified as deposits (if liabilities of a deposit-taking corporation) or loans.
  - The treatment of cash collateral will be investigated further as part of the research agenda.

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_Source: https://www.imf.org/-/media/files/data/statistics/bpm6/approved-guidance-notes/f10-treatment-of-cash-collateral.pdf_