SNA

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SDC/2008/168
SNA User Needs for Monetary and Financial
Policy-making
Steven KeuningDirector-General Statistics, ECB
High Level Forum for the Long-Term Development of
the SNA 17-18 November 2008, Washington D.C.
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Outline

• SNA 2008 immediate follow-up
• SNA user needs for
• Monetary policy-making
• Fiscal policy monitoring
• Financial stability assessment
• Five key issues in the further development of the
  national accounts
• SNA action plan
• Future SNA governance structure and issues for
  discussion

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SNA 2008 immediate follow-up

• SNA implementation phase in the coming years
  (2009 to 2014)
• EU countries according to the ESA revision and
  ECB legal acts
• Aligned implementation plans for other standards
  (BPM), at least in EU
• Regular (e.g. quarterly) compilation of global
  aggregates
• The ECB drafts various (parts of) chapters of the
  new ESA
• Financial transactions, balance sheets and other
  flows
• Financial institutional units and groupings of
  units
• Pensions
• European accounts
• The ECB as a compiler and user of national
  accounts
• Already reflect on future research agenda and
  governance
• Financial issues and their intertwinement with
  real economy increasingly key
• The ECB/Central Banks partly involved in SNA 2008
  process and governance
• ECB member of the UNSC (EU-delegation) and AEG,
  but not of ISWGNA
• Participation in various international committees
  and working groups
• Actively involved in drafting, commenting and
  consultation (on financial accounts)

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SNA user needs for monetary and financial
policy-making (i)

• Monetary policy-making
• Economic analysis, monetary analysis, cross-check
  of outcome of economic analysis with that of
  monetary analysis, analysis of the channels
  through which monetary policy influences prices
  and economic activity, forecasting
• requires
• Complete set of fully consistent quarterly
  financial and non-financial sector accounts and
  balance sheets
• Accounting matrices with full from-whom-to-whom
  accounts (debtor-creditor principle), to analyse
  intersectoral transmissions/interactions/frictions
  
• Sub-sectoring of corporations (foreign/
  public/private, SMEs) and households (type of
  income, financial position), because of their
  heterogeneous reactions
• Capturing financial innovation (true sales,
  synthetic securitisation repos)
• Timely data, but also long time-series
• Close link with monetary data implies minimal
  imputations and re-routings
• Review of contribution of financial capital as a
  production factor

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SNA user needs for monetary and financial
policy-making (ii)

• and
• Fiscal policy monitoring
• Both general government and public sector
  (specific set of accounts for non-financial and
  financial public corporations)
• Close link to accounting standards for the public
  sector
• Pensions
• Other social benefits (health, long-term care,
  social assistance)
• Structural reforms, privatisations,
  nationalisations
• Government provisions and contingencies (implicit
  liabilities, guarantees) as memo items

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SNA user needs for monetary and financial
policy-making (iii)

• Financial stability assessment
• SNA concepts and definitions do not entirely
  follow requirements for macro-prudential analysis
  (group-consolidated accounts as satellite
  accounts?)
• However, core accounts still useful in assessing
  macroeconomic soundness
• Quarterly institutional sector accounts
• Macro-prudential indicators derived from
  financial balance sheets and transaction accounts
  (indebtedness or leverage of corporations)
• Accounting matrices (counterparty knowledge is
  crucial impact of decisions of economic
  subsectors, e.g. to alter the level and
  composition of their portfolios, on the
  counterparty subsectors)
• Concept of institutional units and not of
  establishment units
• Supplementary data on multinationals
• Continental or even world-wide registers
• Holdings, SPVs, conduits

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5 Key issues in the further development of
national accounts

• Main purpose macroeconomic communication,
  policies research
• Whole-economy perspective is key (at the
  micro-level costs are costs, at the
  macro-level costs can be receipts -gt avoid the
  fallacy of composition)
• SNA to include inter-sectoral interactions (full
  matrix, beyond flow-of-funds)
• Core national accounts focus on measurable,
  monetary flows/stocks
• Incomplete welfare concept, but key for economic
  monetary policy-making
• Linkage to monetary flows (e.g. turnover)
  possibly to be strengthened
• Modern economies are mostly service- and not
  industry-oriented
• Human capital as decisive production input
  wages/employment by labour type
• Institutional unit much more relevant than
  establishment unit, even for production
  (differential access to finance, intangible
  capital) more subsectors (distributions matter),
  less attention to ISIC (economics is not
  engineering)
• Review treatment of risk (derivatives,
  off-balance sheet, FISIM)
• Economies are intimately interlinked,
  particularly financially
• Rethink validity of concepts (e.g. reinvested
  earnings) in a globalised world
• Regular compilation of consolidated accounts
  and continental/global accounts

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SNA action plan

• Implementation
• Limited set of standard tables for all countries
  (implementing SDMX)
• Emphasis on (quarterly) integrated sector
  accounts and balance sheets
• Timeliness, consistency (market valuation) and
  from-whom-to-whom (accounting matrices)
  increasingly distinguishing relevant sub-sectors
• Standardised satellite accounts (environment,
  possibly unpaid labour)
• Additional tables according to regional/national
  needs (e.g. ESA)
• Regular compilation of world and (world-)regional
  accounts and indicators
• Research agenda (revising current SNA long-term
  research agenda)
• Complete coverage of key production factors
  (financial/non-financial capital, labour by type)
  and related productivity measures
• Units is the establishment unit still
  meaningful? Role of multinationals, SPVs
• International linkages can globalisation and
  national accounts be reconciled?
• Production-income-revaluation split
• Risk-production split (derivatives, premiums,
  financial services, insurance)
• Asset boundary (intangibles, human capital,
  environment) and asset prices

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Future SNA governance structure and issues for
discussion

• Governance should reflect
• SNA user and compiler needs for monetary and
  financial policy-making
• Increasing importance of financial issues and
  financial services
• Revision process, seasonal and working-day
  adjustments
• Desirability of aligned international standards
  (SNA, ESA, BPM, GFS, MFS)
• ISWGNA structure and process should reflect
  these needs
• Sufficient expertise required in sector accounts,
  particularly financial accounts
• Issues for discussion
• Five key issues in the further development of
  national accounts
• Implementing the research agenda (task forces on
  specific key issues?)
• Future governance structure and revision process
  (role of the ISWGNA)