International Monetary Fund
Organisation for Economic Co-operation and Development
"3. Acquisitions less disposals of valuables
The asset boundary
10.149 Valuables include precious metals and stones, antiques and other art objects and other valuables. However, not all items that may be described by one of these titles should necessarily be included as a valuable in the balance sheet of the owner. The intent of the heading is to capture those items that are often regarded as alternative forms of investment. At various times, investors may choose to buy gold rather than a financial asset and pension funds have been known to buy “old master” paintings when the prices of financial assets were behaving in a volatile manner. Individuals (households in SNA terminology) may also choose to acquire some of these items knowing that they may be sold if there is a need to raise funds.
10.150 Costs of ownership transfer, such as valuers’ and auctioneers’ margins, are often incurred when valuables are exchanged. As with other non-financial assets, these costs are treated as gross capital formation and included in the value of the items when recorded in the balance sheet.
Transactions in valuables
10.151 A possible categorization of valuables is: precious metals and stones; antiques and other art objects; and other valuables. This list should be regarded as indicative and supplementary rather than a standard breakdown. The context of each category is described to assist in identifying and valuing valuables.
Precious metals and stones
10.152 Precious metals and stones are treated as valuables when they are not held by enterprises for sale or use as inputs into processes of production nor are held as monetary gold and are not held as a financial asset in the form of unallocated metal accounts.
Antiques and other art objects
10.153 Paintings, sculptures, etc., recognized as works of art and antiques are treated as valuables when they are not held by enterprises for sale. In principle, museum exhibits are included under valuables.
10.154 Other valuables not elsewhere classified include such items as collections of stamps, coins, china, books etc. that have a recognized market value and fine jewellery, fashioned out of precious stones, and metals of significant and realizable value. .."
"Chapter 11: The financial account
11.8 Financial assets consist of all financial claims, shares or other equity in corporations plus gold bullion held by monetary authorities as a reserve asset. Gold bullion held by monetary authorities as a reserve asset is treated as a financial asset even though the holders do not have a claim on other designated units. Shares are treated as financial assets even though the financial claim their holders have on the corporation is not a fixed or predetermined monetary amount.
"...C. Recording of individual financial instruments
1. Monetary gold and SDRs
11.44 Monetary gold and Special Drawing Rights (SDRs) issued by the International Monetary Fund (IMF) are assets that are normally held only by monetary authorities.
11.45 Monetary gold is gold to which the monetary authorities (or others who are subject to the effective control of the monetary authorities) have title and is held as a reserve asset. It comprises gold bullion (including gold held in allocated gold accounts) and unallocated gold accounts with non-residents that give title to claim the delivery of gold. All monetary gold is included in reserve assets or is held by international financial organizations. Only gold that is held as a financial asset and as a component of foreign reserves is classified as monetary gold. Therefore, except in limited institutional circumstances, gold bullion can be a financial asset only for the central bank or central government. Transactions in monetary gold consist of sales and purchases of gold among monetary authorities. Purchases (sales) of monetary gold are recorded in the financial account of the domestic monetary authority as increases (decreases) in assets, and the counterparts are recorded as decreases (increases) in assets of the rest of the world. Transactions in non-monetary gold (including nonreserve gold held by the monetary authorities and all gold held by financial institutions other than the monetary authorities) are treated as acquisitions less disposals of valuables (if the sole purpose is to provide a store of wealth) and otherwise as final or intermediate consumption, change in inventories, exports or imports. Deposits, loans, and securities denominated in gold are treated as financial assets (not as gold) and are classified along with similar assets denominated in foreign currencies in the appropriate category. A discussion on the treatment of allocated and unallocated gold accounts appears under currency and deposits.
11.46 Gold bullion takes the form of coins, ingots, or bars with a purity of at least 995 parts per thousand; it is usually traded on organized markets or through bilateral arrangements between central banks. Therefore, valuation of transactions is not a problem. Gold bullion held as a reserve asset is the only financial asset with no corresponding liability."
11.60 It is possible to hold accounts for both “allocated gold” and “unallocated gold”. The distinction is precise, practical and recognized in the balance sheets of units holding these accounts. An allocated gold account gives full outright ownership of the gold and is equivalent to a custody record of title. The unallocated gold account does not give the holder the title to physical gold but provides a claim against the account provider denominated in gold. In effect, therefore, it is a deposit denominated in gold. They are thus treated as deposits in foreign currency. Accounts that are held for allocated gold, on the other hand, are treated as holdings of valuables unless they are held by monetary authorities, or other units authorized by them, as reserves..."
"Appearance and disappearance of financialassets and liabilities
12.36 Financial assets that are claims on other institutional units are created when the debtor accepts the obligation to make a payment, or payments, to the creditor in the future; they are extinguished when the debtor has fulfilled the obligation under the terms of the agreement. Monetary gold held in the form of gold bullion, however, cannot be created and extinguished in this way; hence when it becomes a reserve asset it enters the financial part of the balance sheet as a reclassification in the other changes in the volume of assets account from valuables to monetary gold. (At the time it is acquired by a monetary authority it is first classified as a valuable.) The same recording is followed for allocated gold accounts that become part of monetary gold. When allocated gold accounts become reserve assets they are reclassified from currency and deposits to monetary gold, also in the other changes in the volume of assets accounts. Monetary gold may be sold to another monetary authority but otherwise any reduction in holdings follows a similar declassification path; the monetary gold is reclassified to be either a valuable (in the case of gold bullion) or currency and deposits (in the case of allocated gold accounwhen they occur, are recorded in terms of valuables or currency and deposits and not in terms of monetary gold.ts). Subsequent transactions, if and when they occur, are recorded in terms of valuables or currency and deposits and not in terms of monetary gold..."
3. Financial assets and liabilities
Monetary gold and SDRs
13.55 Monetary gold is to be valued at the price established in organized markets or in bilateral arrangements between central banks.
[Mrt: A two-tier market?]
17.240 Monetary gold (including allocated gold accounts) consists of two subcategories, physical gold bullion and unallocated gold accounts, both of which are held by the monetary authorities (or other units authorized by them) as part of reserves. Although it may not be possible to publish these two subcategories separately for reasons of confidentiality, it is important to understand the different considerations that apply to each of them.
17.241 Gold bullion takes the form of coins, ingots, or bars with a purity of at least 995 parts per thousand. Gold held as a valuable by commercial banks or as inventories by some specialized industries, for example jewellers, may be indistinguishable from gold bullion or may be of a lower quality. Physical gold, excluding gold bullion included in monetary gold, whether gold bullion or not, can be referred to as commodity gold (since it is traded on commodity markets).
17.242 Gold bullion may be sold by one monetary authority to another in another country. In such a case the exchange is recorded as an exchange of financial assets only. In all other cases, the gold is reclassified as commodity gold and thus a valuable held by the monetary authority (and is no longer part of reserves) and is then sold as commodity gold. The reclassification is recorded in the other changes in the volume of assets account as demonetization of gold. If the gold is sold abroad it will feature in exports and imports of the countries concerned. When commodity gold is sold, there may be a trade margin attached to it. When a monetary authority acquires monetary gold a reverse path is followed. The gold is acquired initially as commodity gold either from a domestic unit or from abroad and is subsequently reclassified to monetary gold as monetization in the other changes in the volume of assets account.
17.243 There is no interest earned on gold bullion held as a valuable but it is subject to nominal and real holding gains and losses as the gold price changes. Interest can be payable when one monetary authority lends gold bullion held as reserves to another monetary authority.
17.244 Unallocated gold accounts are treated as foreign currency deposits unless they are held by the monetary authorities as part of foreign reserves. Unlike gold bullion, unallocated gold accounts have counterpart liabilities. Because the unallocated gold accounts classified as monetary gold must be held as part of foreign reserves, the counterpart liability is necessarily held abroad. The counterpart liability will not be treated as part of monetary gold in the counterpart country. (Assets held abroad as part of foreign reserves are generally not identified as such within the liabilities of the partner country.) If a monetary authority acquires an unallocated gold account to be treated as reserves, it is recorded first as an acquisition of a foreign currency deposit and then reclassified to monetary gold as a change of classification in the other changes in the volume of assets account. Removing an unallocated gold account from reserves is recorded as, first, a change in classification from monetary gold to a foreign currency deposit and then as a disposal of the deposit.
17.245 Unallocated gold accounts attract interest and a service charge and are also subject to nominal and real holding gains and losses as the gold price alters.
9. Definition of monetary gold and gold bullion revised
Reference: chapter 11, paragraph 11.45 and 11.46 A3.116 The definition of monetary gold has changed in the 2008 SNA in order to align with BPM6. The change stems from the recognition of allocated and unallocated gold accounts whereby the allocated gold account provides title to the physical gold and the unallocated gold account is a deposit denominated in gold. The latter is treated as foreign currency if held with non-residents. Gold bullion (that is, coins, ingots or bars with a minimum purity of at least 995 parts per thousand) is the only financial asset recognized with no corresponding liability when held as a reserve asset by the monetary authorities. Monetary gold is defined as gold to which the monetary authorities (or others who are subject to the effective control of the monetary authorities) have title and is held as a reserve asset and comprises gold bullion and unallocated gold accounts with non-residents)
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