may iecord cash flows with a time lag. Usually, one finds that it is conunon practice, in the government as well as other sector statistics, to mix cash and accrual accounts, making difficult a cledr cut distinction between the two. For simplicity, and since our main purpose is to focus in the methodology of bank analysis, in our app!.cation to Uruguav we will assume that all macro-economic statistics are recorded on a cash basis, even if they are actually recorded on an accruals basis. A good discussion on data sources, and data probler usually faced iri the construction of an actual FOF may be found in Chun, Garcia-Pinto, and Kongsamut [1991].

In our system se also distinguish five inain secto s, Public, Private, Monetary, Foreign and Producing sectors. Ideally, the Public Sector ,'hould incorporate local and regional governments, as well as the activities of para-statal enterprises. However, in general it is difficult to obtain information for a comprehensive publih, sector. For si riplicity, in our application to Uruguay, we will limit ourselves to Central Government operations. Tnus, the Private Sector will comprise both private businesses and para-stavil enterprises. A refinement of our method inay be to separate para-statal enterprises, and to have a more conmprehensive public sector. A description of the budget constraints for all sectors is given in Appendix C. Since our treatment for non-financial sectors is the same as in the RPMSM-X, we will only discuss the a%counts of the monetary sector in detail. (Sec Ventura [1991], for a thorough exposition of the RMSM-X framework). We now explain our methodology.

# 3.2 The Monetary Sector

At an aggregated level, the mon2tary sector accounts in our model will be basically compatible with those of the Banking Survey in the IFS. In Table A. 1 (see Appendix A) we list the current and capital accounts for the consolidated monetarv system. The behavior of this sector is modeled as in the RMSM-X. A description of the model equations is given in Appendix C. The Mvlonetary Sector includes the Central Bank (CB), the Analysis Banks (AB), and Other Financial Institutions (OFI). We will model independently the behavior of the Central Bank, and the Analysis Banks, which represent the financial institutions, or institution thatrwe want to examine in more detail. The flows for Other Financial Institutions are always obtained residually. We first dicuss general issues regarding all monetary system flows. Later, we examine the accounts of the consolidated monetary sector, the CB and the AB.

# Transaction vs. Accounting Flows

Like any other sector, monetary sector flows should conform to the FOF current and capital account format. This may require some explanation for somebody not acquainted with this type of accounting. The most important distinction is that bot:veen "transaction" vs. "accounting" flows. By definition, the FOF system should capture only transactions or exchanges in the economy. For the financial sector, tr- means that we should record in the FOF only those flowc that represent an asset (use) or liability **(S.** -rce) to other sectors in the economy. These include government credits--a source to the government--and demand and savings deposits--a use of the private sector. By contrast, accounting flows are items recorded in the balance sheet, like cash kept in vaults, loan provisions, depreciation, or currency revaluation, that do not represent an immediate asset or liability to other agents.

Currency revaluation is an important component of the balance sheet, specially in institutions with a big proportion of its assets and liabilities denominated in one or more foreign currencies. This is preciseJy the case of the Uruguayan bank that we examine later on. Our model will keep track of all 8