Valuation of Assets and Liabilities in Financial Accounts

1
Valuation of Assets and Liabilities in Financial
Accounts

• 2006 WPFS
• Item 1
• François Lequiller
• OECD secretariat

2
RECENT HOLDING GAINS/LOSSES

• Recent period very large movements in potential
  holding gains of households
• 2001-2006 Increase in housing prices
• 1995-2000 Increase then decrease of stock market
  prices
• Example of France the amount of holding gains is
  the same magnitude as Gross Household Disposable
  Income

3
France Households RevaluationsHousingbut
also Financial assets
4
France Income and holding gains (changes in )
5
Holding gains are extracted from financial
accounts
6
Valuation of financial assets and liabilities

• Information on methods used essential for
  economists
• The SNA is not very prescriptive
• But (naive) users think that stocks are at market
  prices and flows do not contain revaluations
• Methods can differ between countries
• Essential inform users of the exact method used
  for valuing financial accounts information in the
  OECD database
• Main concern Households and General Government

7
Survey on valuation methods

• OECD has surveyed non EU OECD countries France
• France has accepted to test the survey
• Co-organised with Eurostat, who will survey EU
  countries
• Short survey focused on
• Households
• General government
• x
• F3 Securities other than shares
• F5 Shares and other equity
• F6 Life insurance reserves
• Responses will be loaded in the public OECD
  Metastore database

8
First results

• See Tables 2 and 3 of paper
• Responses from France, USA, Canada, Korea, Japan
• Main differences
• F3 Securities US is conceptually at nominal
  value while other countries have a combination of
  market and nominal value, essentially based on
  the existence of secondary markets
• F5 Shares All quoted shares are at market value,
  most countries try to revalue unquoted shares
  (but differences exist for government
  enterprises)
• F6 Insurance reserves sources are at fair value,
  so market price is used (some countries include
  revaluations in their transactions).

9
Future work

• EU countries will be contacted by Eurostat
• Countries are given the French response as
  example
• Countries could be asked for some clarifications
• OECD will load responses in the public OECD
  database for financial accounts
• Hopefully, termination end 2006
• THANK YOU