## FITT Second Meeting (November 24, 2020) — Summary of Discussions

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### Introduction of new FITT members
- Two new members introduced: Mr. Philippe De-Rougemont (Eurostat) and Ms. Akhazzan Nabila (IMF).
- Three additional contributors introduced, representing the government finance statistics community:
  - Mr. Floris Jansen (Eurostat)
  - Mr. Martim Assuncao (Eurostat)
  - Mr. David Stephen Bailey (IMF)

### Outcomes of recent BOPCOM and AEG meetings; Guidance Notes F.5 and F.8
- GN F.5 Treatment of Credit Default Swaps (CDS)
  - Public comments and the Committee supported maintaining the current treatment of CDS as option type.
  - Endorsed forwarding the recommended supplementary breakdown by risk categories to the team working on GN F.4 Financial Derivatives by Type for comprehensive assessment.
  - Co-authors requested to prepare a final version of GN F.5 for posting on the Committee’s website and to include it in the proposed annotated outline of BPM7.
  - Discussion points:
    - Need to include the possibility for a CDS to be treated as a post-paid option with two simultaneous entries at inception: a financial derivative and a matching payable/receivable.
    - Issue relates to the broader question of gross versus net reporting for financial derivatives.
    - F.4 authoring team to consider reviewing the scope to address additional net versus gross reporting issues.
- GN F.8 Valuation of Debt Securities at Both Market and Nominal Values
  - Public comments and the Committees supported proposals to:
    - Strengthen guidance in BPM6 and 2008 SNA for presenting stocks of debt securities at nominal value for liabilities.
    - Report supplementary items on the nominal value of the total amount of assets in debt securities and intercompany lending (in economies where it is relevant).
    - Clarify the definition of nominal value consistently across all manuals.
  - Co-authors requested to prepare a final version of GN F.8 for posting on the Committee’s website and to include it in the proposed annotated outline of BPM7.
  - Discussion points:
    - How to determine relevance for individual countries of total assets and intercompany debt at nominal value; GN may not prescribe thresholds but should articulate aspects compilers need to consider.
    - Observed practice of some (government) debt issuers actively trading in their own securities for nominal valuation, and associated interest implications.
    - Need to harmonize definition of nominal value across manuals and clarify relationship between nominal and market value.

### Action points (from GN discussions)
- The co-authors of both GNs—F.5 and F.8—to prepare final versions of the GNs for posting on the Committee’s website and to be part of the proposed annotated outline of BPM7.
- The co-authors of GN F.5 to consider adding a brief elaboration on different aspects that compilers need to consider in evaluating the relevance of total assets and intercompany debt at nominal value for individual countries.

### Updates to the research agenda
- Proposed topics to add to the research agenda:
  - Treatment of crypto assets in macroeconomic statistics
  - Treatment of Master Risk Participation Agreements
  - Debt concessionality
  - Subscription rights
  - Factoring transactions
- Discussion highlights:
  - Addition of crypto assets and factoring transactions requires coordination with other stakeholders.
  - A related topic: definition of financial assets to include those without counterpart liabilities (including financial gold).
  - Pending clarification with stakeholders on crypto assets scope before deciding way forward.
  - For factoring transactions, Co-Chairs will coordinate with CATT on possibly transferring current-account related issues to CATT; if no support, factoring transactions will be covered within F.14 and sent to CATT for review.
  - F.4 authoring team will reflect on extending scope to cover additional financial derivative issues.
- Agreed priorities:
  - FITT members agreed to add the remaining three topics (Master Risk Participation Agreements; debt concessionality; subscription rights) as medium priority.
  - Countries/international organizations proposing these topics must lead preparation of the GNs with volunteers.

### Action points (research agenda)
- FITT Secretariat to add the following research topics as medium priority:
  - (i) treatment of Master Risk Participation Agreements;
  - (ii) debt concessionality;
  - (iii) subscription rights.
- The Secretariat to request expression of interest for preparation of GNs on the above three topics.
- FITT Co-Chairs to coordinate with the UNSD and the Digitalization Task Team on the proposed new topic on crypto assets and with CATT on factoring transactions.
- F.4 authoring team to come up with a redefined scope of the GN.

### Takeaways from drafting teams, next set of GNs, and timeline
- Key challenges for GN authors:
  - Very tight schedule, including work during the summer holiday period.
  - Conflicting views among authoring teams and FITT members.
  - Diverging perspectives on joint work between National Accounts and External Sector Statistics communities.
- Lessons learnt and recommended practices:
  - Plan ahead and start drafting as early as possible.
  - Conduct consultations within the authoring team at an early stage.
  - Collaborate with team members early for input.
  - Use (virtual) meetings frequently to resolve conflicting views.
- Status of GNs due for February 2021 Committee meeting:
  - F.3: Reverse Transactions (RTs) — GN reviewed by FITT members twice; after addressing latest comments will be sent to the Balance of Payments Task Team and AEG for review.
  - F.10: Treatment of Cash Collateral — Draft GN circulated to FITT members for comments.
- Timeline:
  - Mr. Egesa presented the timeline for GNs scheduled for the February and June 2021 Committee meetings.
  - Some GNs that may be completed ahead of schedule could be forwarded to the Committee for consideration by written procedure.

### Summary and concluding remarks
- Co-Chairs summarized the discussions and the action points.
- The Secretariat to circulate the power point presentation and prepare summary of discussions.

### Attendance (listed participants)
- 1. Mr. Artak Harutyunyan (co-Chair) IMF (co-Chair)
- 2. Mr. Celestino Giron (co-chair) ECB (co-Chair)
- 3. Mr. Mher Barseghyan Armenia
- 4. Ms. Pujiastuti Abassuni Indonesia
- 5. Mr. Gabriele Semeraro Italy
- 6. Ms. Masako Kominami Japan
- 7. Ms. Paula Menezes Portugal
- 8. Ms. Maja Gavrilovic Serbia
- 9. Mr. Simon Boesenberg Switzerland
- 10. Mr. Barend De Beer South Africa
- 11. Mr. Emmanuel Ssemambo Uganda
- 12. Mr. Perry Francis United Kingdom
- 13. Ms. Ruth Judson United states of America
- 14. Mr. Patrick McGuire BIS
- 15. Mr. Branimir Gruic  BIS
- 16. Ms. Prunela Charles-Williams ECCB
- 17. Mr. Enrico Infante Eurostat
- 18. Mr. John Verrinder Eurostat
- 19. Mr. Philippe De-Rougemont Eurostat
- 20. Mr. Floris Jansen Eurostat
- 21. Mr. Martim Assuncao   Eurostat
- 22. Mr. Jorrit Zwijnenburg OECD
- 23. Mr. Benson Sim UNSD
- 24. Ms. Esti Kemp  FSB
- 25. Mr. Carlos Sánchez-Muñoz IMF
- 26. Ms. Nabila Akhazzan  IMF
- 27. Mr. David Stephen Bailey IMF
- 28. Mr. Jose Carlos Moreno-Ramirez IMF
- 29. Ms. Kazuko Shirono  IMF
- 30. Ms. Elizabeth Ball Holmquist IMF
- 31. Ms. Berry Francien IMF
- 32. Mr. Joji Ishikawa (co-Secretary) IMF
- 33. Mr. Kenneth Egesa (co-Secretary) IMF

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_Source: https://www.imf.org/-/media/files/data/statistics/bpm6/fitt/fitt-second-meeting-minutes-november-24-2020.pdf_