Draft Council Regulation (EC) on the allocation of the financial intermediation services indirectly measured (FISIM) within the European system of national and regional accounts (ESA) (97/C 124/05) COM(97)50 final - 97/0037(CNS)

(Submitted by the Commission on 13 February 1997)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 213 thereof,

Having regard to the draft Regulation submitted by the Commission,

Having regard to the opinion of the European Parliament,

Having regard to the opinion of the European Monetary Institute,

Whereas Council Regulation (EC) Nr. . . ./96 of 25 June 1996 on the European system of national and regional accounts in the European Community (ESA) is the reference framework of common standards, definitions, classifications and accounting rules for drawing up the accounts of the Member States for the requirements of the European Community, so that results that are comparable between Member States can be obtained;

Whereas solving the problem of allocating financial intermediation services indirectly measured (FISIM) would be an important qualitative improvement to the methodology of the ESA;

Whereas the allocation of FISIM would lead to a more accurate intra-European Union comparison of Gross Domestic Product (GPD) levels;

Whereas Article 2, paragraph 3, of Regulation (EC) Nr. . . ./96 states that the decision on implementing the allocation of FISIM, the principles of which are described in Annex 3 of the Regulation, shall be taken no later than 31 December 1997;

Whereas, in accordance with the principle of subsidiarity, the objectives of the measures to be taken can only be achieved via a Community legal act because only the Commission can coordinate the necessary harmonization of the statistical methods for calculating and allocating FISIM at Community level, although the calculation and allocation proper as well as the infrastructure required to monitor application of the methods, can be organized by the Member States;

Whereas the Statistical Programme Committee established by Council Decision 89/382/EEC, Euratom (1), consulted by the Commission in accordance with Article 3 of the aforesaid Decision and the Committee on Monetary, Financial and Balance of Payments Statistics established by Council Decision 91/115/EEC (2), consulted by the Commission in accordance with Article 3 of the aforesaid Decision, have declared themselves in favour of the draft of this Regulation,

HAS ADOPTED THIS REGULATION:

Article 1

General provisions

For the purpose of introducing the system for breaking down the financial intermediation services indirectly measured (FISIM), Annex I and II of Annex A to Regulation (EC) Nr. . . ./96 are amended in accordance with Annexes 1 and 2 to the present Regulation.

Member States shall base themselves on the provisions set out in Annex 3 to the present Regulation in order to implement the system of FISIM allocation.

Article 2

Tables

The figures contained in the tables affected by the allocation of FISIM in Annex A to Regulation (EC) . . ./96 are to be amended in accordance with the procedure set out in Article 5 to this Regulation.

The tables affected by implementation of the allocation of FISIM contained in Annex B to Regulation (EC) No . . ./96 are to be amended in accordance with the procedure set out in Article 5 of this Regulation.

Article 3

Reports

Member States shall transmit to the Commission, at its request, any information, necessary for the application of the present Regulation.

Article 4

Committee

The necessary measures for the application of the present Regulation, including measures to clarify and improve the methodology for calculating and allocating FISIM, shall be adopted by the Commission in accordance with Article 2 (2) of Regulation (EC) Nr. . . ./96.

Article 5

Procedure

(1) The Commission shall be assisted by the Statistical Programme Committee, hereinafter referred to as 'the Committee`.

(2) The representative of the Commission shall submit to the committee a draft of the measures to be taken. The committee shall deliver its opinion on the draft within a time limit which the chairman may set in the light of the urgency of the matter in hand. The opinion shall be delivered by the majority laid down in Article 148 (2) of the Treaty establishing the European Community for decisions which the Council is required to adopt on a proposal from the Commission. The votes of the representatives of the Member States within the committee shall be weighted in the manner set out in the abovementioned Article. The chairman shall not vote.

(3) The Commission shall adopt measures which shall apply immediately. However, if these measures are not in accordance with the opinion of the Committee, they shall be communicated by the Commission to the Council forthwith. In that event:

(a) the Commission shall defer application of the measures which it has decided for a period of three months from the date of communication;

(b) the council, acting by a qualified majority, may take a different decision within the time limit referred to in point a.

Article 6

Data transmission

The Member States shall apply the provisions of this Regulation within the context of transmitting to the Commission the tables specified in Article 3 of Regulation (EC) Nr. . . ./96.

Article 7

Final provisions

This Regulation shall enter into force on the 20th day following its publication in the Official Journal of the European Communities.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

(1) OJ No L 181, 28. 6. 1989, p. 1.

(2) OJ No L 59, 6. 3. 1991, p. 1.

ANNEX 1

FINANCIAL INTERMEDIATION SERVICES INDIRECTLY MEASURED (FISIM)

Pursuant to Council Regulation (EC) No . . ./97, of . . . 1997, on the allocation of financial intermediation services indirectly measured (FISIM) within the framework of the European system of national and regional accounts (ESA), the following amendments are made to the ESA chapters set out hereafter:

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TABLE 1.1.

EFFECT OF ALLOCATING FISIM TO INSTITUTIONAL SECTORS, INCLUDING CHANGES FOR NON-MARKET PRODUCERS

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TABLE 1.2.

EFFECT OF ALLOCATING FISIM TO NOMINAL SECTOR ONLY

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ANNEX 2

Annex II of Annex A to Regulation (EC) Nr. . . ./96 is amended as follows.

The following text is deleted from the third sentence of point 11:

': property income receivable less interest payable, excluding any property income receivable from the investment of their own funds`.

ANNEX 3

Calculating FISIM

1. Calculation of FISIM output by the sectors S122 and S123

(a) Statistical data required

For each of the sub-sectors S122 and S123, it is necessary to use the table of average stocks of loans and deposits (split by user sectors) for the period (average for the start-of-period and end-of-period, or preferably the average of four quarters or twelve months) and the accrued interest after reallocation of interest rate subsidies to their actual recipients as defined by the 1995 ESA;

(b) The choice of a reference rate

The loan and deposit headings in the balance sheets of financial intermediaries included in S122 and S123 have to be broken down to differentiate between loans and deposits:

- which are 'interbank` (i.e. within the institutional units included in sectors S122 and S123),

- which are undertaken with the user institutional sectors (S124 - S125 - S11 - S13 - S14 - S15 - S2) (except with the central banks).

Each of these sub-divisions must be broken down to show whether the borrower or the depositor is resident or non-resident.

To obtain the FISIM output of the resident FIs by institutional sector, the reference rate is calculated as:

>NUM>interest receivable on loans between S122 and S123

>DEN>stock of loans between S122 and S123

This calculated rate is the 'internal` reference rate which is used to calculate FISIM produced by the resident FIs and consumed by residents.

To determine FISIM imports and exports, the reference rate used is the average rate weighted by the levels of stocks in the headings 'loans between S122 and S123 on the one hand, and non-resident FIs on the other hand` and 'deposits between S122 and S123 on the one hand, and non-resident FIs on the other hand` which are included in the balance sheet of the financial intermediaries.

This calculated rate is the 'external` reference rate which is used to calculate FISIM exports and imports;

(c) Calculation of FISIM by institutional sector

For each institutional sector it is necessary to have the following table of loans and deposits granted by the resident FIs:

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The total FISIM by institutional sector is obtained as the sum of FISIM on loans granted to the institutional sector and of FISIM on deposits of the institutional sector.

FISIM on the loans granted to the institutional sector = interest receivable on loans - (loans stocks x 'internal` reference rate)

FISIM on the deposits of the institutional sector = (deposit stocks x 'internal` reference rate) - interest payable on deposits

Part of the output is exported; on the basis of the balance sheet of the financial intermediaries (S122 and S123) we observe:

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Exported FISIM is calculated using the 'external` reference rate as follows:

FISIM on loans granted to non-resident (including FIs) = interest receivable - (loan stocks x 'external` reference rate)

FISIM on the deposits of non-residents (including FIs) = (deposit stocks x 'external` reference rate) - interest payable;

(d) Breakdown into intermediate and final consumption of FISIM allocated to households

The services attributable to households must be broken down into:

- intermediate consumption of households in their capacity as owners of dwellings,

- intermediate consumption of households in their capacity as owners of unincorporated enterprises,

- final consumption of households.

It entails a breakdown of loans to households (stocks and interest) into:

- dwelling loans,

- loans to households as owners of unincorporated enterprises,

- other loans to households.

Loans to households as owners of unincorporated enterprises and dwelling loans are generally shown separately in the various breakdowns of lending in financial and monetary statistics. Other loans to households can be obtained by subtraction. FISIM for loans to households should be distributed among three items (dwelling loans, loans to households as owners of unincorporated enterprises and other loans to households) on the basis of information on average stocks and interest for each of the three groups. Dwelling loans are not identical to mortgage loans, as mortgage loans can have other purposes.

Household deposits must be broken down into:

- deposits of households as owners of unincorporated enterprises,

- deposits of individuals.

In the absence of statistics on the deposits of households as owners of unincorporated enterprises, average stocks can be calculated for each industry on the basis of the ratio of deposits to value added observed for corporations and extrapolated for unincorporated enterprises. FISIM on the deposits of households must be distributed between FISIM on the deposits of households as owners of unincorporated enterprises and that on the deposits of individuals on the basis of the average stocks of these two categories, for which, owing to lack of further information, the same interest rate will be used.

2. Calculation of imported financial intermediation

Non-resident FIs grant loans to residents and receive deposits from residents.

For each institutional sector it is necessary to have the following table:

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The financial intermediation imported by each institutional sector is therefore calculated as follows:

FISIM imported for loans = interest receivable by non-resident FIs - (loan stocks x 'external` reference rate)

FISIM imported for deposits = (deposits stocks x 'external` reference rate) - interest payable by non resident FIs