Opinion of the European Monetary Institute at a request of the Council of the European Union under Article 109 f (6) of the Treaty establishing the European Community (“the Treaty”) and Article 5.3 of the Statute of the EMI on a Draft Proposal for a Council Regulation on the allocation of the financial intermediation services indirectly measured (FISIM) within the European system of national and regional accounts (ESA) (COM(97) 50 final) (“the Draft Regulation”) (CON/97/23)
Date: 1997-10-16
Institutions: European Monetary Institute
Subjects: Economic and Monetary Union, European accounting system, data collection, economic statistics, gross domestic product

GS/LD/97/684

OPINION OF THE EUROPEAN MONETARY INSTITUTE

at a request of the Council of the European Union under Article 109 f (6) of the Treaty

establishing the European Community (“the Treaty”) and Article 5.3 of the Statute of the

EMI on a Draft Proposal for a Council Regulation on the allocation of the financial

intermediation services indirectly measured (FISIM) within the European system of national

and regional accounts (ESA) (COM(97) 50 final) (“the Draft Regulation”)

CON/97/23

1.  The  present  opinion  was  requested  in  a  letter  dated  18 March  1997  from  the  Council  of  the

European  Union  which,  for  this  purpose,  transmitted  to  the  EMI  document  “COM(97) 50 final”

containing the Draft Regulation and its explanatory memorandum. The EMI is competent for this

consultation, by virtue of Articles 109f (6) of the Treaty and Article  5.3 of the Statute of the EMI.

2.  The objective of the Draft Regulation is to introduce the system for breaking down the FISIM, in

accordance  with  Article   2(3)  of  Council  Regulation  (EC)  No  2223/96  of  25th  June  1996  on  the
ESA (“the ESA 1995 Regulation”)1,  and,  if  appropriate,  to  adopt  the  necessary  measures  for  the
implementation  thereof.  Breaking  down  the  FISIM  allows  the  services  provided  by  financial

intermediaries  to  households,  the  rest  of  the  world,  general  government  and  non-profit-making

institutions  to  be  reflected  in  GDP.  These  services  are  currently  recorded  by  convention  as

intermediate consumption, to the extent that they are not directly charged to customers. This might

distort GDP, and affect cross-country comparisons to the extent that direct invoicing of customers

by financial intermediaries varies from one Member State to any other.

3. 

In July 1996 the EMI set out the statistical requirements for Stage Three of Monetary Union and
specified the prospective requirements in the field of national accounts statistics.2 These statistics
are  the  prime  responsibility  of  the  Commission  (Eurostat)  at  European  level,  and  of  statistical

institutes at national level. The EMI takes a close interest as a current user of such statistics and in

view  of  its  responsibility  to  enable  the  ESCB  to  carry  out  its  function  in  Stage  Three.  More

specifically,  national  accounts  statistics  provide  essential  background  data  for  the  assessment  of

the economic situation in the Member States. Moreover, from the start of Stage Three in January

1999 the focus of the single monetary policy will move to the euro area as a whole. Against this

1  OJ No L 310, 30 November 1996, page 1.
2 

Implementation Package (Statistical Requirements for Stage Three of Monetary Union), EMI, July 1996.

 
 
                                                
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background, the implementation at Community level of the allocation of the FISIM is expected to

be a further step to enhance the accuracy and comparability of GDP. The EMI may accept test

periods  as  a  practical  way  forward  for  those  aspects  where  general  agreement  or  decisions  are

not  possible  at  present.  The  EMI  would  also  like  to  emphasise  the  importance  of  defining  as

meaningful reference rates as possible for this purpose of the calculation. The EMI would further

note that statistical compilers may need to co-operate, at national and international level, to ensure

that consistent assumptions are made.

4.  The EMI is aware that the Commission (Eurostat) has carefully considered data availability in the

preparation  of  its  proposals.  The  explanatory  memorandum  of  the  draft  Regulation  states  that

Member  States  already  collect  some  information  on  the  breakdown  of  FISIM  and  that  the

implementation  of  the  allocation  of  FISIM  will  entail  the  collection  of  supplementary  information

and changes in concepts and classifications used. However, the implications may strongly diverge

from one Member State to the other depending on the existing collection and compilation systems,

including  those  for  which  central  banks  are  responsible  in  the  Member  States.  Also,  estimation

procedures  may  be  required  to  a  varying  extent  from  one  Member  State  to  the  other,  and  over

time.  Estimation  may  be  a  useful  way  of  keeping  down  compliance  costs,  provided  estimation

methods are appropriate and avoid serious distortion to comparability among Member States.

5.  The EMI notes that, following the decision to allocate FISIM, flows of interest will be shown in the

national accounts after deduction of FISIM. The EMI considers it important that the new method

of recording should not imply the loss of data on flows of interest  before the deduction of FISIM,

particularly data on interest paid and received by financial intermediaries.

6.  Against  the  background  of  the  interests  of  the  ECB  and  the  national  central  banks  mentioned

above, the EMI proposes that, after all key decisions have been taken, the necessary measures for

the  application  of  this  Regulation  shall  be  taken  by  the  Commission  after  consultation  of  the

Committee on Monetary, Financial and Balance of Payment Statistics.

7.  This opinion will be published in the Official Journal of the European Communities.

16 October 1997