- 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).
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