- Johan Mathisen, and Anthony Pellechio
- Published Date:
- March 2007
Central banks: In most countries, separately identifiable institutions that, across countries, are subject to varying degrees of government control, engage in differing sets of activities, and are designated by various names (e.g., central bank, reserve bank, national bank, or state bank).
General government: Institutional units that, in addition to fulfilling their political responsibilities and their role of economic regulation, produce principally non-market services (possibly goods) for individual or collective consumption and redistribute income and wealth.
Other depository corporations: All resident financial corporations (except the central bank) and quasi-corporations that are mainly engaged in financial intermediation and that issue liabilities included in the national definition of broad money (e.g., commercial banks, merchant banks, savings banks, savings and loan associations, building societies and mortgage banks, credit unions and credit cooperatives, rural and agricultural banks, and travelers’ check companies that mainly engage in financial corporation activities).
Other financial corporations: The remaining financial corporations, consisting of resident corporations or quasi-corporations, including those nonprofit institutions that are (1) mainly engaged in the production of financial services (such as insurance), or (2) financed by subscriptions from financial enterprises and have the objective of promoting or otherwise serving the interest of those enterprises.
Nonfinancial corporations: Institutional units that are principally engaged in the production of market goods and nonfinancial services.21
Other resident sector: Households (all physical persons in the economy) that have as their principal functions the supply of labor, final consumption, and, as entrepreneurs, the production of market goods and non-financial (possibly financial) services. This sector also includes nonprofit institutions that are legal entities principally engaged in the production of nonmarket services for households and whose main resources are voluntary contributions by households.
Nonresidents: Consists of all institutional units outside the country that enter into transactions with resident units, or have other economic links with resident units.
Financial assets are commonly defined as a subset of economic assets—entities over which ownership rights are enforced, individually or collectively, by institutional units and from which economic benefits can be derived by holding or using the assets over a period of time.22
Financial assets are usually classified according to two criteria: the liquidity of the asset and the legal characteristics that describe the form of the underlying creditor/debtor relationship. For vulnerability purposes, financial instruments can be categorized using the terms described below.
Currency consists of notes and coins that are of fixed nominal values and are issued by central banks or governments. Monetary gold (if under the effective control of the central bank) and special drawing rights can also be considered part of currency. Deposits include all claims on the central bank, other depository corporations, government units, or other institutional units that are represented by evidence of deposit.
Transferable deposits comprise all deposits that are exchangeable on demand at par and without penalty or restriction and directly usable for making payments by check, draft, giro order, direct debit/credit, or other direct payment facility.
Other deposits comprise all claims, other than transferable deposits, that are represented by evidence of deposit (e.g., savings and fixed-term deposits, foreign currency nontransferable deposits).
Debt securities are negotiable instruments serving as evidence that units have obligations to settle by means of providing cash, a financial instrument, or some other item of economic value (e.g., treasury bills, government bonds, corporate bonds and debentures).
Loans are financial assets that are created when a creditor lends funds directly to a debtor, and are evidenced by non-negotiable documents (including leases).
Shares and other equity comprise all instruments and records acknowledging, after the claims of all creditors have been met, claims on the residual value of a corporation.
Insurance technical reserves consist of net equity of households in life insurance reserves and pension funds and prepayments of premiums.
A financial derivatives contract is a financial instrument that is linked to a specific financial instrument, indicator, or commodity, and through which specific financial risks (such as interest rate risk, currency, equity and commodity price risk, and credit risk) can be traded in their own right in financial markets.
Other accounts receivable/payable include trade credit and advances and other such accounts.
Trade credit and advances comprise trade credit extended directly to corporations, government, nonprofit institutions, households, and the rest of the world, as well as advances for work that is in progress (or is to be undertaken) and prepayment for goods and services.
An institutional unit, according to the 1993 SNA, is “an economic entity that is capable, in its own right, of owning assets, incurring liabilities and engaging in economic activities and in transactions with other entities … [which] is able to take economic decisions and engage in economic activities for which it is itself held to be directly responsible and accountable at law,” including entering into contracts (IMF, 1993a, paragraph 4.2). Finally, an institutional unit must be a resident unit in the domestic economy and be either a household or a legal or social entity whose existence is recognized by law or society independently of the persons or other entities that may own or control it (i.e., government units, corporations, and nonprofit institutions) (IMF, 1993a, paragraph 4.5).
2002, “A Balance Sheet Approach to Financial Crisis,”IMF Working Paper 02/210 (Washington: International Monetary Fund).
2006, “Balance Sheet Risks in a Dollarized Economy—The Case of Georgia,”IMF Working Paper 06/173 (Washington: International Monetary Fund).
1999, “External Vulnerability in Emerging Market Economies: How High Liquidity Can Offset Weak Fundamentals and the Effects of Contagion,”IMF Working Paper 99/88 (Washington: International Monetary Fund).
2002, “Fear of Floating,”Quarterly Journal of Economics, Vol. 117, No. 2 (May), pp. 379–408.
2004, “A Contingent Claims Approach to Corporate Vulnerability Analysis: Estimating Default Risk and Economy Wide Risk Transfer,”IMF Working Paper 04/155 (Washington: International Monetary Fund).
2004, Controlling Currency Mismatches in Emerging Markets (Washington: Institute for International Economics).
2003, “Dealing with Banking Crises in Dollarized Economies,”in Managing Financial Crises: Recent Experience and Lessons from Latin America, ed. byIMF Occasional Paper No. 217 (Washington: International Monetary Fund).
International Monetary Fund (IMF), 1993a, System of National Accounts 1993 (Washington: International Monetary Fund).
International Monetary Fund (IMF), 1993b, Fifth Edition of the Balance of Payments Manual (Washington: International Monetary Fund).
International Monetary Fund (IMF), 2000, Monetary and Financial Statistics Manual (Washington: International Monetary Fund).
International Monetary Fund (IMF), 2001a, International Financial Statistics (Washington: International Monetary Fund).
International Monetary Fund (IMF), 2001b, Government Finance Statistics Manual (Washington: International Monetary Fund). Available via the Internet: http://www.imf.org/external/pubs/ft/gfs/manual/index.htm.
International Monetary Fund (IMF), 2002, International Investment Position: A Guide to Data Sources (Washington: International Monetary Fund).
International Monetary Fund (IMF), 2003, External Debt Statistics: Guide for Compilers and Users (Washington: International Monetary Fund). Available via the Internet: http://www.imf.org/external/pubs/ft/eds/Eng/Guide/index.htm.
International Monetary Fund (IMF), 2004a, “Biennial Review of the Implementation of the Fund’s Surveillance and of the 1977 Surveillance Decision—Overview, Modalities of Surveillance, Content of Surveillance, and Public Information Notice on the Executive Board Discussion” (August 24). Available via the Internet: www.imf.org/external/np/pdr/surv/2004/082404.htm.
International Monetary Fund (IMF), 2004b, “Liquidity Management” (unpublished;Washington: International Monetary Fund).
International Monetary Fund (IMF), 2004c, Compilation Guide on Financial Soundness Indicators (Washington: International Monetary Fund). Available via the Internet: https://www.imf.org/external/np/sta/fsi/eng/2004/guide/index.htm.
International Monetary Fund (IMF), 2005, Global Financial Stability Report, April 2005 (Washington: International Monetary Fund).
International Monetary Fund (IMF), 2006, “Monetary and Financial Statistics: Compilation Guide—Pre-publication Version” (Washington: International Monetary Fund). Available via the Internet: http://www.imf.org/external/pubs/ft/cgmfs/eng/index.htm.
2000, “Assessing Financial System Vulnerabilities,”IMF Working Paper 00/76 (Washington: International Monetary Fund).
2006, “Sectoral Balance Sheet Mismatches and Macroeconomic Vulnerabilities in Colombia, 1996–2003,”IMF Working Paper 06/5 (Washington: International Monetary Fund).
2005, “Balance Sheet Currency Mismatch and Liquidity Analysis,”Belize—Selected Issues, IMF Country Report 05/353 (Washington: International Monetary Fund), pp. 16–26.
2003a, “Debt Intolerance,”in Brookings Papers on Economic Activity, No. 1, ed. by (Washington: Brookings Institution), pp. 1–74.
2003b, “Addicted to Dollars,”NBER Working Paper No. 10015 (Cambridge, Massachusetts: National Bureau of Economic Research).
2005, Debt-Related Vulnerabilities and Financial Crises: An Application of the Balance Sheet Approach to Emerging Market Countries,IMF Occasional Paper No. 240 (Washington: International Monetary Fund).
2004, Bailouts and Bailins? Responding to Financial Crisis in Emerging Economies (Washington: Institute for International Economics).