DEPOSITS AND LOANS Borderline Issues

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DEPOSITS AND LOANS Borderline Issues

• SNA Chapter 11
• MFSM Chapter 4

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1993 SNA

• Transferable deposits" and "other" deposits, the
  latter including "all claims, other than
  transferable deposits, on the central bank, other
  depository institutions, government units, and in
  some cases other institutional units that are
  represented by evidence of deposit". (Para 11.72)
• Loans include all financial assets that (a) are
  created when creditors lend funds directly to
  debtors, (b) are evidenced by non-negotiable
  instruments, or (c) for which the lender receives
  no security evidencing the transaction (Para
  11.83)

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• Not clear in practice.
• When both parties are banks, it is particularly
  hard to classify consistently.
• Requires additional operational guidance.
• ESA 95 recognizes problem.
• adds criterion of who is taking the initiative.
• in addition, convention based on who is borrower
  so that MFIs short-term liabilities are all
  deposits.

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Question 1

• What are the views of Group members on the
  analytical use of the split between deposits and
  loans?
• The IMF Committee on BOP Statistics agreed that
  the distinction was useful.

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Question 2

• Should the usefulness of this split be confirmed,
  do Group members agree that current international
  standards do not provide clear criteria to
  perform such a distinction?
• The Committee noted that the distinction was
  blurred in a minority of cases. It was agreed
  that it was not necessary for the Committee to
  prescribe criteria.

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Question 3

• Do Group members have any preference for any of
  the criteria mentioned in the note, i.e.
• looking at who takes the initiative (and whether
  or not a distinction should be made between
  short-term and long-term instruments)
• taking into account the nature of the borrower
  (banks deposits / non-banks loans)
• defining in a very precise way which instruments
  meet the definition of transferable and other
  deposits
• considering the representation in the documents
  that evidence loans or deposits etc.?
• The Committee mentioned the parties own
  descriptions, and the financial/nonfinancial
  borrower criterion. It was considered that the
  use of the party who initiates the arrangement
  was not an effective criterion.

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