Statistical treatment of the Eurosystem's internatonal ... · III The statistical treatment of...

STATISTICALTREATMENT OF

THE EUROSYSTEM�SINTERNATIONAL

RESERVES

October 2000October 2000October 2000October 2000October 2000

October 2000October 2000October 2000October 2000October 2000

STATISTICALTREATMENT OF

THE EUROSYSTEM�SINTERNATIONAL

RESERVES

© European Central Bank, 2000

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ISBN 92-9181-110-6

ECB Eurosystem�s international reserves � October 2000 3

Contents

I Definition of the Eurosystem�s reserve assets in Stage Three of EMU 5

I.1 Introduction/components in the IMF definition: external assetscontrolled by monetary authorities 5

I.2 Control of the NCBs/ECB 5I.3 External assets of the Eurosystem 6I.4 Conclusions 8

II Some methodological features in the context ofexternal reserves statistics 10

II.1 The gross and net reserve assets concepts.The specific case of financial derivatives. 10

II.2 Classification of financial derivatives in the presentationof external reserve statistics 10

II.3 Valuation principles for reserve assets in external statistics.Discrepancies with accounting valuation rules. 11

II.4 Consideration of income on reserve assets 12

III The statistical treatment of reserve asset instruments 13

III.1 General aspects 13III.2 Positions/transactions in gold 13III.3 Positions/transactions vis-à-vis the IMF (including SDRs) 16III.4 Positions/transactions in securities 17III.5 Positions/transactions in currency and deposits 17III.6 Positions/transactions in financial derivatives 20III.7 Summary 26

IV Appendix: Some numerical examples 30

IV.1 Gold transactions 30IV.2 Credit lines 34IV.3 Repurchase agreements 38IV.4 Interest rate swaps 40IV.5 FRAs 45IV.6 Forward foreign exchange contracts 47

ECB Eurosystem�s international reserves � October 20004


I Definition of the Eurosystem�sreserve assets in Stage Three of EMU

I.1 Introduction/components inthe IMF definition: externalassets controlled bymonetary authorities

Since the definition of reserve assets included in the5th edition of the IMF Balance of Payments Manual(the �BPM5� released in October 1993) leaves someroom for interpretation, the present chapter setsout the definition of reserve assets to be applied inthe national balance of payments (b.o.p.),international investment position (i.i.p.) andinternational reserves statistics from 1999 onwards.Statistics for the euro area as a whole are compiledby aggregating the statistics for the EU MemberStates participating in the euro area and the ECB.

This definition conforms to the guidelinesestablished in the BPM5 and the internationalstandards for statistics on reserve assets. In thisrespect, discussions within the framework ofthe IMF/BIS common template on internationalreserves and foreign currency liquidity havespecifically been taken into account.

In accordance with Article 105 (2) of the Treatyestablishing the European Community, the basictasks1 to be carried out through the EuropeanSystem of Central Banks (ESCB), which iscomposed of the European Central Bank (ECB)and the national central banks (NCBs)participating in the single currency, shall be, interalia: to define and implement the monetarypolicy of the Community; to conduct foreignexchange operations; and to hold and managethe official foreign reserves of the MemberStates participating in Monetary Union. Thus:

(1) The Eurosystem, governed by theGoverning Council of the ECB, constitutesthe monetary authority of the euro area;and

(2) The reserve assets of the singlecurrency area consist of the ECB�sreserve assets and the reserve assetsheld by the participating NCBs.

According to the definition of reserve assetsestablished in the 5th edition of the IMFBalance of Payments Manual, paragraph 424,�Reserve assets consist of those external

assets that are readily available2 to andcontrolled by monetary authorities for directfinancing of payment imbalances, for indirectlyregulating the magnitudes of such imbalancesthrough the intervention in exchange marketsto affect the currency exchange rate, and/or forother purposes�. Assets under the effectivecontrol of the ECB constitute the reserveassets of the ECB, whereas only those assetseffectively controlled by the NCBs are includedin the national b.o.p./i.i.p. reserve assets items.

Against this background, the appropriateinterpretation of the concepts of �control bymonetary authorities� and �external assets� inthe new environment of the single currencyarea should be clarified.

I.2 Control of the NCBs/ECB

According to Article 30 of the Statute of theESCB, the pooling by the ECB of the initialEUR 50,000 million, adjusted downwards bydeducting the shares in the ECB�s capitalsubscription key of the NCBs which are notparticipating in the euro from the outset, hasbeen carried out in the form of an outrighttransfer of ownership. Therefore:

(1) These assets, being pooled under Article30 of the Statute of the ESCB, should beconsidered to be under the direct andeffective control of the ECB andregarded as reserve assets of the ECB.

In addition, an ECB Recommendation for aCouncil Regulation based on Article 30.4 of theStatute of the ESCB will establish the manner inwhich the Governing Council of the ECB mayaffect further calls on foreign reserves. Theseexternal assets, which will, in principle, beretained by the NCBs, may be regarded ascontributing to preserving market confidencein the Eurosystem as a whole, since they couldbe mobilised in an efficient manner. Therefore, itis concluded that:

1 See Article 3 of the Statute of the European System ofCentral Banks and of the European Central Bank (Statuteof the ESCB).

2 Readily available assets should be understood as referringto highly liquid, marketable and creditworthy assets.


(2) As long as no transfer of ownershiptakes place, external assets retained bythe NCBs in relation to Article 30.4 areunder their direct and effective controland should preferably be treated asreserve assets of each individual NCB;only in the event that these further callson foreign reserves are carried out inexactly the same form as the initialtransfer of EUR 50,000 million requiredby Article 30 (i.e. by means of a poolingarrangement which implies creditingeach participating NCB with a claimequivalent to its additional contribution)or at the time at which the potential callwould be executed, should these assetsbe considered as reserves of the ECB(assets under the direct and effectivecontrol of the ECB).

Finally, according to Article 31.3 of the Statuteof the ESCB, all other operations in foreignreserve assets remaining with the nationalcentral banks shall, above a certain limit, besubject to further approval by the ECB in orderto ensure consistency with the exchange rateand monetary policies for the euro area.Nevertheless, owing to the fact that theguidelines under this article will restrict therequest for prior approval by the ECB toforeign exchange activity above a giventhreshold, with regard to the timing of thetransaction and the manner in which thetransaction is to be performed, and the factthat the ECB may only request that atransaction be delayed in very exceptionalcircumstances, it is considered that:

(3) The NCBs still retain direct andeffective control over their remainingassets, which they could use to performtransactions to fulfil their obligationstowards international organisations inaccordance with Article 23 of theStatute of the ESCB. Thus these assetswould be considered as reserve assetsof each participating NCB; in fact theguideline is not directly aimed at limitingor controlling the management of theNCBs� reserves.

I.3 External assets of theEurosystem

(i) Foreign currency versus euro-denominatedassetsA key question relates to whether or notreserve assets should necessarily be foreigncurrency-denominated3 assets. This might haveimplied that certain euro-denominated assetscould be treated as reserve assets of the euroarea if the euro were to be considered areserve currency.

However, once it is acknowledged that the aimof reserve assets is to have available sufficientliquid resources for foreign exchange policyoperations, this consideration may not bemaintained, since euro-denominated assets,regardless of the issuer, could not be used tosupport the euro. As a result:

(1) Reserve assets of EMU should bedenominated in foreign currency, i.e.euro-denominated claims on eitherEMU or non-EMU residents should notbe considered as reserve assets of theeuro area.

In line with this reasoning, it is also understoodthat:

(2) From a national perspective, euro-denominated claims on both other EMUresidents and non-EMU residents shouldnot be considered as reserve assets.

The legal foundations of the euro4 determinethat the euro should be regarded as domesticcurrency in all the participating Member Statesand could not be considered as both adomestic and a foreign currency from a nationalviewpoint. The possibility of including euro-denominated holdings issued by other EMUresidents in the national reserves would implythat even the intra-ESCB end-of-day balancesresulting from the TARGET system, which are

3 Hereafter, references to �foreign currency-denominated�assets are to be understood as referring to assetsdenominated in any currency (e.g. the US dollar, Japaneseyen, pound sterling, Swiss franc, etc.) other than the euro.

4 See Council Regulation (EC) No. 974/98 of 3 May 1998 onthe introduction of the euro, OJ L 139, 11.5.98.


denominated in euro, would be considered asreserve assets at the purely national level,which would be conceptually very difficult tounderstand. Finally, it could be seen asendangering the idea of the singleness offoreign exchange policy, in that it would give theimpression that the euro market would be splitinto different heterogeneous local markets.

(ii) Non-EMU versus EMU issuers: theparticular case of foreign exchange deposits

In line with the general framework of the IMF�sBalance of Payments Manual and the SNA 935,the criterion of residency is a prerequisite tobe fulfilled by any asset which is intended toqualify as a reserve asset.

Only claims on non-residents would beconsidered as external assets.

However, in Stage Three of EMU three relevantgroups of residents could be identified:(i) residents of a euro area Member State(domestic residents); (ii) residents of the othereuro area Member States (other EMUresidents); and (iii) residents of countriesoutside the euro area (non-EMU residents).Consequently, when defining reserve assets atthe national level, groups (ii) and (iii) could, atleast theoretically, be considered as the relevantnon-resident population, whereas only group(iii) would represent the non-resident conceptwhen identifying EMU reserves. Against thisbackground, the following should be pointed out:

(1) The ECB�s/NCBs� claims in foreigncurrency on non-residents of the singlecurrency area, i.e. non-EMU residents,are to be considered as reserve assetsof EMU;

(2) In parallel, those assets have also to beregarded as international reserves froma national perspective;

(3) Foreign currency-denominated claimson other EMU residents cannot be partof the EMU reserves because they aredomestic claims; and

(4) Likewise, those assets are not to beconsidered as reserve assets from anational perspective.

Although foreign currency-denominated claimson other EMU residents would fulfil thepresent definition of reserves (external assetsissued by a non-resident) from a strictlynational point of view, the extent to which thistype of assets could be used for foreignexchange policy (intervention) purposes seemsto be limited. Moreover, an interpretation ofthe meaning of reserve assets at the nationallevel, if they are not considered as reserveassets for the EMU at the same time, might bedifficult to sustain in the context of Stage Three,bearing in mind that the holding andmanagement of the reserves of the euro areawill be one of the basic tasks of the Eurosystemand no longer only a task of the individualparticipating NCBs. Finally, the exclusion ofthese assets, which do not represent asignificant part of the current foreign assetsholdings of most of the NCBs, from the reservedefinition at the national level means that thesum of the individual reserves of the NCBs andthe ECB equals the Eurosystem consolidatedreserves, enhancing transparency and theEurosystem�s credibility in exchange rate-related issues.

As a final conclusion, NCBs� claims in foreigncurrency on domestic and other EMU residentsare not to be regarded as reserve assets.

In this framework, and despite some concerncaused by some recent financial crises in othercountries, it has been concluded that:

(i) Foreign currency-denominated collateralisedand non-collateralised deposits placed withforeign branches/affiliates of domestic banksare to be regarded as reserve assets;

(ii) Conversely, foreign exchange collateralisedand non-collateralised deposits placed withresident branches of foreign banks are tobe considered as domestic assets andtherefore cannot be included in thereserve assets definition.

This conclusion derives from the fact that theresidence principle is the basic criterion to be

5 Paragraph 11.61 of the SNA 93 states that: �Reservesmust be claims on non-residents��.


applied in order to determine whether an assetqualifies as a reserve asset.

Finally, there is a need for a more preciseinterpretation of the residency criterionregarding some specific assets. In this sense:

Gold, Special Drawing Rights (SDRs) and theReserve position in the IMF held by the NCBs/ECB are to be considered as reserve assetsboth at the national and at the EMU level.

Summing up, the principles guiding the conceptof external assets in Stage Three of the EMUcan be summarised as follows:

(1) The ECB�s/NCBs� claims on residents ofthe single currency area are notrelevant b.o.p./i.i.p. transactions/holdings for EMU;

(2) The ECB�s/NCBs� claims in euro onnon-residents of the single currencyarea are relevant b.o.p./i.i.p.transactions/holdings for EMU, althoughthey are not EMU Reserve assets;

(3) The ECB�s/NCBs� claims in foreigncurrency on non-residents of the singlecurrency area plus gold, SDRs and theReserve position in the IMF arerelevant b.o.p./i.i.p. transactions/holdings for EMU and they are EMUReserve assets (provided that theymeet the liquidity and marketabilitycriteria required by the BPM5).

I.4 Conclusions

Against this background, the principles guidingthe concept of reserve assets at the nationallevel in Stage Three of EMU might besummarised as follows:

(1) the Eurosystem constitutes the onlymonetary authority of the euro area;thus, the reserve assets of the singlecurrency area consist of the ECB�sreserve assets and the reserve assetsheld by the participating NCBs;

(2) assets under the effective control of theECB constitute the reserve assets ofthe ECB, whereas only those assetseffectively controlled by the NCBs areto be included in the national b.o.p./i.i.p. reserve assets items;

(3) reserve assets in Stage Three of EMUshould be denominated in foreigncurrency, i.e. euro-denominated claimsshould not be considered as reserveassets at the national or at the EMUlevel;

(4) the criterion of residency should beregarded as a prerequisite to be fulfilledby any asset which is to qualify as areserve asset; in the context of theeuro area this implies that only claimson non-EMU residents, i.e. non-residents of the euro area, should beconsidered as reserve assets in StageThree from both a national and an EMUperspective.

Resulting from these conclusions, the followingtable summarises the treatment prescribed forthe different assets in the balance sheet of theECB and the euro area NCBs respectively.


1 The term �deposits� also refers to collateralised deposits.Legend: RA = Reserve assets; PI = Portfolio investment;

OI = Other investment; FD = Financial derivatives.

Currency of Residence Type of asset1 National ECB Totaldenomination of issuer ESCB

(euro area)

Assets on the Balance Foreign Non-EMU Deposits placed with foreign branches of RA RASheet of the ECB currency euro area resident banks

Other assets RA RA

EMU Deposits placed with euro area resident OI �banks

Other assets PI/FD �

Euro Non-EMU PI/OI/FD PI/OI/FD

EMU PI/OI/FD �

Assets on Claim on Euro ECB OI OI �the balance the ECBsheet of Non-EMU RA RAthe NCBs

of which Deposits placed with foreign branches RA RAor euro area resident banks

Other Foreign Other EMU Deposits placed with other euro area OI �claims currency resident banks

Other assets PI/OI/FD �

Domestic Deposits placed with domestic banks � �

Other assets � �

Euro Non-EMU PI/OI/FD PI/OI/FD

Other EMU PI/OI/FD �

Domestic � �

Gold, SDRs and Reserve RA RAposition in the Fund


II Some methodological features in thecontext of external reserves statistics

(2) Positions in financial derivatives ofreserve assets should be recorded inthe i.i.p. and other reserve-relatedstatistics (such as the Eurosystem�s andthe ECB�s template on internationalreserves and foreign currency liquidity)on a net basis, although this, inconsequence, entails a deviation fromthe gross reserve asset concept.

This exception to the general rule wasconsidered the only feasible way to reconcileflows and stocks related to financial derivativestransactions/ positions in reserve assets. Ifseparate positions for assets and liabilities ofthese holdings were to be shown, theapplication of the gross reserve asset conceptwould imply that financial derivative liabilities ofthe monetary authorities would not beincluded under reserves.

II.2 Classification of financialderivatives in thepresentation of externalreserve statistics

The presentation of a separate heading forfinancial derivatives could be justified by therecently heightened interest in the reserveassets item and its composition, and the use offinancial derivatives in the management ofreserves. It might assist the correct recordingof certain monetary authorities� financialderivative transactions, as the presenttreatment proved to be heterogeneous. Finally,separate identification might enhance thereconciliation between stocks and flows offinancial derivative transactions of themonetary authorities.

For all these reasons, a separate category forfinancial derivatives under the �Reserve assets�heading of the euro area b.o.p. and i.i.p. wascreated. The main components of the Reserve

II.1 The gross and net reserveassets concepts. The specificcase of financial derivatives.

In the context of some countries� financial crises,the idea that �usable reserves� might be a moreimportant indicator of a country�s ability to meetits foreign exchange obligations than the grossreserves gained in importance. These usablereserves would be the result of supplementinggross data with information about encumbranceson reserves (i.e. �reserve-related liabilities�6).

The Eurosystem has devoted further work tothe collection of information on foreigncurrency assets (including official reserves) andreserve-related liabilities, in the course of 1999and 2000, within the frame of reference of theIMF/BIS �Common template on internationalreserves and foreign currency liquidity�.

Nonetheless, the usefulness of the traditionalcategory of reserve assets based on the �grossreserve assets� concept has also been recognised.

Against this background, the following has beenconcluded regarding the disclosure of theEurosystem�s international reserves in externalstatistics:

(1) The structure of the reserve assetscategory remains unchanged in the euroarea b.o.p. and i.i.p. (i.e. disclosed on agross basis as defined in the BMP5)7;

(2) This information is complemented withfurther details on foreign currency assetsas well as reserve-related liabilities of theeuro area and the ECB, which are shownin the Eurosystem�s and the ECB�stemplate on international reserves andforeign currency liquidity, respectively.

As a departure from the recommendationregarding gross recording of reserve assetfigures, the following has been decided asregards the disclosure of financial derivativesfalling into the category of reserve assets:

(1) Transactions in financial derivatives ofreserve assets should be recorded inthe b.o.p. statistics on a net basis;

6 This concept has recently been developed by the IMF andthe BIS within the framework of the so-called �Commontemplate on international reserves and foreign currencyliquidity�.

7 All EMU Member States have actually been compilingreserve assets on a gross basis since the beginning ofStage Three.


assets sub-category of the Eurosystem b.o.p.and i.i.p. would then be stated as follows:

Reserve assets

Monetary goldSpecial drawing rightsReserve position in the IMFForeign exchange

Currency and depositswith monetary authoritieswith MFIs (excluding centralbanks)

SecuritiesEquityBonds and notesMoney market instruments

Financial derivativesOther claims

II.3 Valuation principles forreserve assets in externalstatistics. Discrepancies withaccounting valuation rules.

In accordance with the BPM5, reinforced by theIMF operational guidelines for the compilationof the Common template on internationalreserves and foreign currency liquidity, thefollowing rules are being applied in thevaluation of reserve assets:

(1) All reserve asset transactions to bereported in the b.o.p. statements are tobe recorded at market prices (includinginterest accrued and not yet paid) at thetime of the transaction and convertedinto euro using market exchange ratesat the time of the transactions;

(2) Stocks of reserve assets in the i.i.p. andother reserve asset stock statisticsshould be valued using closing mid-market prices (including the interestaccrued and not yet paid) as at the end ofthe appropriate periods; closing mid-market exchange rates prevailing at thereference date should be applied forthe conversion of stocks denominatedin foreign currency into euro.

(3) Gold should be valued at the closingmarket price (gold fixing usually quotedin terms of US dollars per fine troyounce) prevailing at the end of thereference period.

National central banks� balance sheets haveproved to be the main sources of informationon reserve assets in most of the euro areacountries. However, accounting/operationalprinciples and b.o.p./i.i.p. statistical standards onreserve assets are not fully consistent,especially as far as the valuation of reserveassets is concerned. Discrepancies wereconsidered as particularly significant in thefollowing areas:

(1) Frequency of valuation. Since the frequencyof revaluation of instruments in accountingstatements is not consistent withstatistical guidelines (which prescribevaluation at market prices consistent withthe reference period of reserve assetsstocks), this could create operationalproblems for some NCBs. In practice, thevaluation at market prices of the stocks ofreserve assets in the balance sheets of theNCBs only takes place on a quarterly basisfor the time being;

(2) Valuation and income recognition on securities.When reserve assets are sold, thereference price used by the accountantsto record such an operation is usually theaverage cost of the portfolio. This pricemay differ from the price of thetransaction, which is the relevant oneprescribed by statistical standards.Moreover, accountants calculate thecorresponding realised profit as thedifference between the sale price andthe average cost of the portfolio. Theprofit computed in this way would differfrom the difference between the saleprice and the acquisition price of thesecurities concerned.

(3) Transactions in financial derivatives. Atmaturity of the financial derivativecontract (foreign exchange forwardcontracts, swaps, futures), differencesbetween the market price and the priceagreed in the contract would be


recorded as income in the accountingstatements, whereas the appropriateb.o.p. recording would require theseamounts to be recorded as financialderivatives transactions in reserveassets. In addition, the average costcriterion is also applied in order todetermine the results of transactions infinancial derivatives.

(4) Reconciliation problems on the stock ofreserves due to some revaluation practices inthe balance sheet. Accountants calculateon a quarterly basis the revaluationadjustments to the position of certainassets in order to reflect the differencesbetween their market value and the valuerecorded in the books, based on theaverage cost criterion. In this context,unrealised revaluation losses are countedas �income�, whereas unrealisedrevaluation gains are transferred directlyto a �revaluation account�. Thesedifferences should not give rise to anyb.o.p. entry, but they should be recordedas valuation changes in the reconciliationexercise for the i.i.p. This reconciliationmight be hampered, if b.o.p. flow datawere derived from accounting stock data.

As a result of these discrepancies, if b.o.p./i.i.p.reserve assets data were to be compiled on thebasis of the information provided by theaccounting departments, some adjustmentswould be required in order to avoid departuresfrom the methodology prescribed by statisticalstandards.

Former discrepancies in the treatment ofreversible gold transactions have disappeared asthe methodology applied by statisticians hasadjusted to the accounting principles. Theamount of gold exchanged as a result of anyreversible gold transaction, and in particular inthe case of gold swaps, should be treated asprovision of collateral. In this case, the

monetary gold account would remainunchanged. In the case of exchange of foreigncurrency, this would generate a net change (anincrease) in the total gross reserves of the goldlender (the cash borrower) as a result of thereceipt of the money. This treatment will befurther analysed in the following section of thispublication.

II.4 Consideration of income onreserve assets

The recording of investment income isconsidered to be a functional category in thesame manner as the financial account of thebalance of payments. As there is no separatecategory for income on reserve assets in theBPM5 Standard Components the followingbullet points have been decided, with regard tothis issue in the euro area b.o.p.:

(1) Income on reserve assets is to berecorded indistinguishably under the�other investment� item of theinvestment income account, includinginterest income on reserve holdings ofbonds and notes and money marketinstruments;

(2) Income on reserve assets should berecorded on an accruals basis at least ona quarterly basis;

(3) One major problem regarding thecompilation of income on reserve assetsderives from the discrepancies betweenthe concept of income in the b.o.p.standards and in the accounting/operation rules, as pointed out above.When transactions in reserve assetstake place, the reference prices used bythe accountants in the calculation of thecorresponding realised income are thesale price and the average cost of theportfolio, which may differ from itsacquisition cost.


III The statistical treatment of reserveasset instruments

disclosed under item I.B (�Other foreign currencyassets�) in Section I of the template, thus notbeing considered as part of the official reserveassets (reflected under item I.A). Foreignexchange net drains vis-à-vis resident and non-resident counterparts should be disclosed ineither Section II or Section III. Other positionsvis-à-vis residents and non-residents shouldalso be considered in Section IV, whereappropriate.

For the sake of clarity, the present chapter aimsat following the structure of the above-mentioned template to the greatest possibleextent. Following an exhaustive analysis of thetransactions involving international reserves,this chapter addresses the statistical treatmentto be applied in both national and euro areab.o.p., i.i.p. and international reserves statistics.

Methodological guidelines on particularly complextransactions presented in this chapter will beillustrated with practical examples referring totheir statistical treatment in the euro area statisticsand the template, in the next chapter.

This chapter has been structured in thefollowing way:� positions/transactions in gold;� positions/transactions vis-à-vis the IMF

(including SDRs);� positions/transactions in securities;� positions/transactions in currency and

deposits; and� positions/transactions in financial

derivatives.

III.1 General aspects

Since the monetary crises which took place inmost of the Asian countries in the late 1990s,international organisations have graduallybecome more concerned with the availability ofreliable information on the capacity of acountry to contend with potential financialcrises. Consequently, the IMF has establishednew requirements for the dissemination of dataon international reserves under the Fund�sSpecial Data Dissemination Standard (SDDS)project. The Common template oninternational reserves and foreign currencyliquidity (the template) requires additionaldetails on international reserves and otherforeign currency claims and drains from thosepresented so far in international standards,addressing, for the first time, the compilation offigures on reserve-related liabilities.

Since the IMF�s rules providing guidance forreporting on the basis of the new template stillleave some room for interpretation, thefinalisation of the statistical guidelines for thecompilation of the Eurosystem�s internationalreserves data remained a priority from 1999until early 2000.

In the first chapter of this booklet, thedefinition of reserve assets to be applied inboth national and euro area statistics from1999 onwards has been clearly established. Inaccordance with this definition, only claims ofthe Eurosystem8 in foreign currency on non-residents of the euro area � plus gold, Reserveposition in the IMF and SDRs � fall within thecategory of reserve assets. This definitionexpressly precludes foreign currency claims onresidents in the euro area from beingconsidered as reserve assets, either at thenational or at the euro area level.

The template encompasses a wider range ofpositions � embodied in the concept of foreigncurrency liquidity � as compared with the morerestricted concept of gross external reserves.Therefore, and in order to be consistent withthe agreed definition of reserve assets of theeuro area, the Eurosystem�s claims on residentsdenominated in foreign currency should be

8 The Eurosystem is composed of the European CentralBank and the national central banks participating in thesingle currency. Foreign exchange claims and liabilities ofcentral governments and/or the Treasury are not includedin the reserve assets definition for the euro area inaccordance with the institutional arrangements in theTreaty establishing the European Community. Article 105(2) of the Treaty, in conjunction with Article 116 (3), givesthe Eurosystem the exclusive right to hold and managethe official foreign reserves of the Member States fromthe beginning of Stage Three of EMU.


III.2 Positions/transactions in gold

i) Outright transactions in gold. Inaccordance with paragraph 438 of the IMFBalance of Payments Manual (5thedition),monetary gold can only be owned by monetaryauthorities or by others subject to the effectivecontrol of the authorities. Accordingly, threedifferent situations could be analysed for goldtransactions with non-resident institutionalunits: (i) transactions between monetaryauthorities, i.e. national central banks (NCBs);(ii) transactions between monetary authorities,i.e. NCBs, and other counterparts such asother MFIs; and (iii) transactions between non-monetary authorities.

In line with recommendations in the fifthedition of the IMF Balance of Payments Manual(BPM5), only gold transactions in which bothcounterparts belong to the institutional sectorof monetary authorities (including internationalmonetary organisations), i.e. case (i) above,should be recorded as monetary gold flows inthe reserve assets of the b.o.p. statistics.Likewise, changes in stocks should be recordedunder Reserve assets/Monetary gold in the i.i.p.

When the NCB�s counterpart to a goldtransaction is not a monetary authority, i.e. case(ii) above, the gold transaction should berecorded under the goods item in the currentaccount. The resulting increase or decrease inthe gold position of the NCB arising from therespective monetisation/demonetisation of thegold should be reflected as a reclassification inthe �Other adjustment� column of the i.i.p. Inother words, monetisations and demonetisationsof gold are to be treated as reclassifications ofgold and, therefore, would never be reflected inthe balance of payments, although they inducechanges in the international investment position.9

Gold purchases and sales between resident andnon-resident entities, other than monetaryauthorities, i.e. case (iii) above, should berecorded as �Trade in goods�.

Finally, gold purchases and sales by residentmonetary authorities to resident entities shouldonly induce entries in the �Other adjustment�

column of the i.i.p. reflecting the monetisation/demonetisation of gold [as explained in case (ii)].

ii) Gold swaps. Gold swap agreementsshould be treated as gold repos (see nextpoint) even though there is a formal differencebetween gold swaps and gold repos, as only inthe former case is there an actual change ofownership (see next paragraph).

iii) Gold repos. The recording of gold repos(and gold swaps) should be in line with thetreatment applied to other repo transactionswith securities. In general, according to theBPM510, repos are treated as collateralised loans,i.e. deposits in which the borrowed funds arebacked by other assets (securities or, in the caseof gold repos, gold). At any time when an NCBengages in a gold repo agreement and borrowsforeign currency funds, the cash-borrowing NCBshould record in both the b.o.p. and the i.i.p.an increase in �Reserve assets/Foreign exchange/Currency and deposits� and a parallelincrease in �Other investment/Liabilities/Monetary Authorities/ Currency and deposits�.Interest payments/ receipts (i.e. the differencebetween the sale and the repurchase prices)should be treated as income and, therefore,recorded under the current account in the b.o.p.

By contrast (i.e. in the event of an NCB takinggold in exchange for cash), the level of grossinternational reserves of the cash-lending NCBwould remain unchanged (apart from theincome received at the end of the transaction).In the case of a financial counterpart, both thedecrease in foreign currency funds and thebalancing claim on the cash-taking NCB shouldbe classified under the same heading �Reserveassets/Foreign exchange/Currency and deposits�,hence, with a null effect on the total.

This kind of transaction would exert aninfluence on the following items of thetemplate as reported by the cash-borrowingNCB:

9 See paragraph 439 of the IMF Balance of Payments Manual(5th edition).



� I.A.(1).(b) �Official reserve assets/Foreigncurrency reserves (in convertible foreigncurrencies)/Deposits�, accounting for anincrease in holdings of foreign currency;

� II.3.i �Other/outflows related to repos(-)�, amounting to the nominal value(see next paragraph) of the open repopositions (as reserve-related liabilities) ifthe residual maturity of gold swaps/repos were below one year; and

� IV.(1).(d) �Securities lent or repoed andincluded in Section I�, accounting for thevalue of the gold swapped/repoed.

The nominal amount of predetermined inflows/outflows associated with gold swaps/repos resultsfrom the repurchase price of the gold (thusencompassing both the starting purchase priceplus the income linked to these transactions).Nonetheless, practical problems could arise inthose cases where information is taken fromaccounting statements in which only informationon the initial price of the transaction is available(the income would be indistinguishably accrued inthe profit and loss account). Therefore, the initialvalue of the transactions would be accepted as aproxy for the nominal value of the predeterminedinflows/outflows.

The valuation of the gold swapped/repoedcould prove difficult in cases where no on-balance accounting register is derived from thedelivery of collateral and the amount of goldinvolved remains in the portfolio of the cashborrower. For the sake of convenience, theapplication of the initial value of the transaction(i.e. the initial amount of cash received) isrecommended for estimating the value of thegold exchanged, in the event that no otheraccounting information is disclosed on-balance.

iv) Gold loans and deposits. Owing to the lackof a common terminology applicable totransactions in gold, hereinafter gold loans anddeposits will be treated as identicaltransactions, which only differ in the nature ofthe gold borrower: when it is a financialinstitution (including other monetaryauthorities), these transactions (gold loans/deposits) will be referred to as gold deposits;when the gold borrower is not a financial

institution, they will be called gold loans.

The rationale behind these transactions isusually connected with the search for higherrates of return on the gold holdings ofmonetary authorities. The gold is lent in themarket to a creditworthy counterpart (whichsometimes acts as a mere intermediary for agold dealer with a transitory, short position ingold). Generally, high quality collateral isrequired by the NCB, which is returned to thegold borrower once the agreed term of thecontract expires.11 At that time, the arrangedrevenue of the gold loan/deposit is paid to theNCB by the borrower.

In spite of the fact that gold loans/deposits mayinvolve opposing economic considerations ascompared with gold swaps/repos (as revealedby the direction of the income payments), thestatistical treatment of the gold is similar:neither the lending of gold nor the delivery ofcollateral (this latter applies only in the case ofan exchange of securities collateral beingrequired) would involve any recording in theb.o.p. or the i.i.p. (i.e. holdings of monetary goldwould remain unchanged). Only the income onexternal reserves would be considered underthe current account. In the template, theamount of gold deposited/lent would remain inSection I, under Monetary gold, and would alsobe recorded in Section IV.(1).(d) (�Securitieslent or repoed and included in Section I�).

The adoption of this solution involves, in fact,an important implication for the whole euroarea: reversible transactions in gold donot have any effect on the level ofmonetary gold regardless of the type oftransaction (i.e. gold swaps, repos, deposits orloans), in line with the recommendationscontained in the IMF guidelines.

11 The exchange of securities collateral in gold loans/deposits could cause some confusion with gold swaps/repos. In the case of gold delivered in exchange of (andbacked by) securities collateral, these transactions enterinto the category of gold loans/deposits (i.e. can never beconsidered as gold swaps/repos). However, in the case ofgold deposits and loans, cash collateral is never exchanged(if this were the case, such a transaction would no longerbe considered as a gold loan/deposit, but as a gold swap/repo).


Provided that monetary authorities in the euroarea only deal with highly creditworthycounterparts, the same statistical treatment isrecommended, irrespective of the economicnature of the counterpart (either other NCBs,other MFIs or other non-residents), i.e. no changesat all in either flows or stocks under Reserve assetswould derive from gold lending and (whererequired) the delivery of securities collateral.

III.3 Positions/transactions vis-à-visthe IMF (including SDRs)

SDRs, as defined by the IMF, are reserve assetscreated by the IMF to supplement otherreserve assets which have been periodicallyallocated to IMF members in proportion totheir respective quotas.12 Changes in SDRholdings might be induced by two differentsituations: (1) transactions involving SDRpayments or receipts; or (2) allocation/cancellation of SDRs.

i) SDRs account transactions. The statisticaltreatment of these accounts should be in linewith the methodology applied to correspondentbank accounts: any b.o.p. transaction might besettled by means of these accounts andtherefore, in addition to recordings under thecorresponding item of the b.o.p., variation in theSDRs item should be disclosed. For instance,purchases of US dollars would produce a changein the composition of reserve assets, namely anincrease in currency and deposits (USD) and anequivalent decrease in SDRs.

Interest received corresponding to the ownSDRs account should be reflected in a receiptunder the current account (income) offset byan equivalent payment representing an increasein reserve assets (SDRs).

This treatment should be applied to any othertransaction with the IMF settled using theseaccounts (for instance, transactions linked toNAB loans).

ii) SDRs� allocation/cancellation. No transactionshould be recorded in the b.o.p. because, in fact,no transaction occurs. However, a change in the

stock of reserve assets would be reflected in thei.i.p. via an entry in the �Other adjustments�column, thus enabling the reconciliation betweenflows and stocks.

Although part of the Reserve position in theFund is denominated in SDRs, no recordingunder �Reserve assets/SDRs� should derivefrom movements in this position, which shouldonly be reflected under �Reserve assets/Reserve position in the IMF�, as pointed out inthe following paragraphs.

iii) Reserve position in the IMF. An IMFmember may have, in the Fund�s �Generalresources account�, a position that is the sumof: (i) the reserve tranche position, which amember may draw upon; and (ii) anyindebtedness of the Fund under a loanagreement that is readily repayable to themember.13 Although the limit of the capacity ofthe IMF to make use of these loan agreementsis denominated in each country�s domesticcurrency, if the IMF decided to enter into oneof these agreements, the country in questionwould obtain a claim on the IMF denominatedin foreign currency which, therefore, could beincluded in its foreign reserve assets.

1) As regards the treatment of claims arisingfrom Fund financing, following somerecommendations from the IMF, thoseclaims derived from the General Agreementto Borrow (GAB) and the New Agreement toBorrow (NAB) should be classified under�Reserve assets/Reserve position in theIMF� in the b.o.p. and the i.i.p. and underitem I.A.(2) �IMF Reserve position� of thetemplate.

2) By contrast, those claims arising from theuse of the IMF�s PRGF (Poverty reduction andgrowth facility) Trust loan account [which willsubstitute the Enhanced structuraladjustment facility (ESAF) as from 2000]should be statistically treated as deposits inthe Fund and thus recorded under�Reserve assets/Foreign exchange/Currency and deposits� in the b.o.p. andthe i.i.p., and separately identified underI.A.(1).(b).(i), �Official reserve assets/Foreigncurrency reserves (in convertible foreign


currencies)/Total currency and deposits withother national central banks, BIS and IMF� inthe template. Countries� commitments tothe IMF�s PRGF (and formerly the ESAF)not yet drawn should not be reported inSection III of the template.

iv) Purchases/repurchases within the IMFreserve position. If one member buys foreigncurrency using the Fund�s general resourcesaccount (purchase) by drawing on its positionin the Fund, a reclassification should berecorded under reserve assets, thus notaltering the total level of reserves. Such atransaction should be reflected by means of anincrease in holdings of foreign exchange and asymmetrical decrease in the reserve position inthe Fund. A repurchase would represent thereverse transaction.

III.4 Positions/transactions insecurities

In principle, no special quandaries seem to ariseas regard transactions in securities withinreserve assets. Major problems might resultfrom the identification of the issuer�s residency,as is usually the case in portfolio investment. Asa rule, only foreign currency-denominatedsecurities issued by non-residents of the euroarea could be held to be reserve assets.

The application of the accruals principle isprescribed for all types of securities, includingzero coupon bonds. Provided that a security isdenominated in foreign currency and issued bya non-resident institution, the accrued interestshould be recorded as interest income under�Current account/Investment income/Otherinvestment� and the offsetting entry wouldthen be recorded under �Reserve assets/Foreign exchange/Securities�. When thecoupon payment is finally received from theissuer, it should be recorded under �Reserveassets�, thus reducing holdings derived fromthe accrued interest computed in formerperiods.

Securities lending would not be considered inthis category, but rather in the next one; as a

general rule, securities temporarily exchangedin repo-type transactions (including securitieslending) would not give rise to any recordingunder �Securities� (see next point).

III.5 Positions/transactions incurrency and deposits

As in the previous point, no particularlyonerous difficulties arise from this kind oftransaction. However, and returning to thegeneral principles underlined in theintroduction of this document, only claims inforeign currency on non-residents of the euroarea are classified as reserve assets. Thisdefinition expressly excludes foreign currencydeposits with financial institutions resident inthe euro area from the concept of externalreserve assets, at either the national or theeuro area level.

i) Holdings/transactions of/in foreign currencynotes and coins. These will be reportedindistinguishably together with foreign currencydeposits under �Reserve assets� in both theb.o.p. and the i.i.p. (more specifically, under�Reserve assets/Foreign exchange/Currency anddeposits�). In the template, they would beallocated to item I.A.(1).(b).(i), �Official reserveassets/Foreign currency reserves (in convertibleforeign currencies)/Total currency and depositswith other national central banks, BIS and IMF�.

ii) Loans/deposits to external portfolio managers.As an alternative to the management of itsportfolio, an NCB might send money to a non-resident financial intermediary, not necessarilyincluded in the category of financial institution,which would subsequently invest the funds inother financial instruments denominated inforeign currency and return the earned income tothe NCB. These assets managed by externalagents should be classified in each correspondentprescribed category. However � although it is notthe most common scenario � on some occasionsNCBs do not have access to information on thefinal destination of these funds. Only in this caseshould the foreign exchange funds be included ascurrency and deposits in the b.o.p. and the i.i.p.,under �Reserve assets/Foreign exchange/


Currency and deposits�. In the template, they alsohave to be recorded as currency and deposits, i.e.item I.A.(1).(b) �Official reserve assets/Foreigncurrency reserves (in convertible foreigncurrencies)/Total currency and deposits�.

iii) Foreign currency loans. Despite the factthat the borderline between deposits and loansis slight, according to the criterion followed inother sections of this document, it is possibleto distinguish between them in accordancewith the economic nature of the counterpart.Thus, those transactions in which the cashborrower is an NCB or any other financialinstitution will be treated as deposits, whereasthey will be considered to be loans in the caseof any other counterpart. As regards thestatistical treatment of loans, as a general rule,those loans to non-financial non-residents thatfulfil the necessary conditions to be consideredas reserve assets will be recorded in the b.o.p.and the i.i.p. under �Reserve assets/Otherclaims�. Accordingly, in the template theseclaims would be identified separately under�Official reserve assets/Other reserve assets/Loans to non-bank non-residents� [I.A.(5)]).

iv) Repurchase agreements, securities lendingtransactions (in this latter case, only if cashcollateral is involved) and sell-buy back operations.These types of transactions would be treatedas collateralised loans/deposits. Repoedsecurities temporarily exchanged as collateralwould not give rise to any b.o.p./i.i.p. entry.

At the beginning of a foreign currency-denominated repo or a securities lendingtransaction (with delivery of foreign exchangecollateral), the cash borrower (the NCB) wouldrecord an increase in its holdings of foreigncurrency (under �Reserve assets/Foreignexchange/Currency and deposits�) togetherwith a liability (to be recorded under the�Financial account/Other investment/Liabilities/Monetary authorities/Currency and deposits�).Opposite recordings are registered when thecontract expires.

As regards the other side of the sametransaction, i.e. in the case of an NCB enteringinto a reverse repo, the cash-lending NCB does

not register any variation in the total amount ofreserve assets. If the non-resident counterpart isan NCB or another financial institution (which isthe most common scenario), no recordingoccurs at all in the b.o.p. and no variation isreflected in either the i.i.p. or the template (thedecrease in holdings of foreign currency of theNCB is balanced by an identical foreigncurrency claim on the cash-borrower, bothclassified in the category �Reserve assets/Foreign exchange/Currency and deposits�).

In accordance with the treatment of foreigncurrency loans, if the counterpart of a reverserepo transaction were neither a financialinstitution nor one of these other financialintermediaries/external managers, areclassification would be registered in the b.o.p.(a decrease in the holdings of currency anddeposits and an increase in �Other claims�),which would not affect the total level ofreserve assets. This statistical treatment differsslightly from the proposal of the IMF, whichrecommends classification of all claims arisingfrom reverse repos under �Reserve assets/Other claims�.

In the case of reverse repos followed byoutright sales of the securities received ascollateral, NCBs could even register negativepositions in �Reserve assets/Foreign exchange/Securities�, accounting for a sale of assetswhich did not previously form part of theirportfolio.

Repo transactions would produce changes inthe following items of the template to bereported by the cash-borrowing NCB:� I.A.(1).(b) �Official reserve assets/

Foreign currency reserves (inconvertible foreign currencies)/totalcurrency and deposits�, accounting foran increase in holdings of foreigncurrency;

� II.(3).(i) �Other/outflows related torepos (-)�, amounting to the nominalvalue (see next paragraph) of the openrepo positions (as reserve-relatedliabilities) if the residual maturity of thefuture payments were lower than oneyear; and


� IV.(1).(d) �Securities lent or repoed andincluded in Section I�, accounting for thevalue of the repoed securities.

The nominal amount of predetermined inflows/outflows associated with repo-type positionsresults from the repurchase price of thecollateral involved (thus encompassing both thestarting purchase price plus the income linkedto these transactions). Nonetheless, practicalproblems could arise in those cases whereinformation is taken from accountingstatements in which only the initial price of thetransaction is available (income derived fromcollateralised loans is indistinguishably accruedin the profits and losses account). Therefore,the initial value of the transactions would beaccepted as a proxy for the nominal value ofthe predetermined inflows/outflows.

As regards the valuation of lent or repoedsecurities, this could appear arduous in caseswhere the delivery of collateral is not usuallyrecorded on-balance and those securitiesinvolved generally remain in the portfolio of thecash borrower. For the sake of convenience, asa practical rule, the application of the initialvalue of the transaction (i.e. the initial amountof cash received) is again recommended forestimating the value of the repoed securities, inthe event of no other accounting informationbeing disclosed on-balance.

v) Credit lines: the nominal amount of creditlines not yet drawn provided/received by NCBswhich could suppose foreign exchangeoutflows/inflows in the short run should bereported in Section III of the template underitem III.(3) �Undrawn, unconditional credit linesprovided by/to monetary authorities�.

Once drawn upon, in accordance with thetreatment mentioned at the beginning of thissection for loans and deposits, liquid claims ofan NCB on the cash borrower arising fromwithdrawn credit lines conceded by monetaryauthorities could be held to be �Reserveassets�, provided that the correspondentcounterpart is considered to be highlycreditworthy and the claim arising fulfils thecondition of being readily available.14 Reciprocal

currency arrangements among central banksand with the Bank for International Settlementsenter into this category, as well as otherfinancing agreements between central banksand consortia of private financial institutions.

The statistical treatment of credit lines in thetemplate could be summarised as follows:A) If an NCB provided another entity witha credit line in foreign exchange, it wouldregister variation in the following items:� I.A.(1).(b) �Official reserve assets/

Foreign currency reserves (inconvertible foreign currencies)/totalcurrency and deposits�, accounting forthe part of the credit line already drawnon (a decrease in holdings of foreignexchange);

� I.A.(1).(b)/I.A.(5) (As either deposits orother reserve assets, depending on thenature of the counterpart), accountingfor the claim derived from the use of thecredit line (counting on a creditworthycounterpart); and

� III.(3).(ii) �Undrawn unconditional creditlines provided to:�, accounting for thepart of the value of the credit line whichremained undrawn, which would beconsidered to be a contingent net(negative) drain on foreign currency.

B) Symmetrically, if an NCB were providedwith a credit line in foreign currency, it wouldbe reflected in the template by means of thefollowing recordings:� I.A.(1).(b), �Official reserve assets/

Foreign currency reserves (inconvertible foreign currencies)/totalcurrency and deposits�, accounting forthe part of the credit line already drawnon (an increase in holdings of foreignexchange);

� II.(1), �Foreign currency loans, securitiesand deposits/outflows (-)�, if the residualmaturity were lower than one year,accounting for the part of the credit linealready drawn on (negative net drain);and



� III.(3).(i), �Undrawn unconditional creditlines provided by:�, accounting for thepercentage of the value of the credit linewhich remained undrawn, which wouldbe considered to be a contingent net(positive) drain on foreign currency.

In those cases where collateral is required whencredit lines are drawn on, those securities shouldbe disclosed in Section IV, under item (d).

III.6 Positions/transactions infinancial derivatives

These are probably the most complextransactions for compilers (and not onlyregarding reserve assets). Many efforts havebeen devoted to the harmonisation of thestatistical treatment of financial derivativeswithin the euro area, in parallel with similarwork being carried out within the IMF.

It is of utmost importance to highlight the factthat the recording of both transactions andstock positions in financial derivatives underthe Eurosystem�s reserve assets should becarried out on a net basis (i.e. including bothpositive and negative positions), as explained informer sections of this booklet. This treatmentregarding positions appears to be an exceptionto the gross reserve assets concept, but it wasconsidered the only feasible way to reconcileflows and stocks.

Generally speaking, liquid positions in financialderivatives settled in at least one foreign currencyvis-à-vis creditworthy non-resident counterpartswould be computed under �Reserve assets� on amarked-to-market basis. This valuation wouldinclude all unrealised gains and losses associatedwith both changes in prices (derived from interestrate movements, changes in foresight, etc.) andchanges in foreign exchange rates. The inclusion ofboth positive and negative stocks under �Reserveassets� on a net basis could cause negativepositions to occur. This could happen frequentlyand, in particular, manifest itself in the case ofinterest rate derivatives (i.e. swaps and forwardrate agreements), which quite often �flip� fromassets to liabilities and vice versa.

Some doubts could emerge regarding theconsideration of OTC derivatives (for instance,swap agreements or some types of options) asreserve assets. It should be up to each NCB todecide on whether such a financial instrumentis offsetable on the market and a prevailingprice for the underlying assets enables itsclassification in this category, provided that, inprinciple, there would be no other objection todoing so.

As regards the statistical consideration offinancial derivatives in the template, apart fromother particular considerations which will beanalysed on a case-by-case basis in the nextparagraphs, as a general rule the net marked-to-market value will be recorded under itemI.A.(5) and IV.(1).(e) of the euro area template.Thus, item I.A of the template (i.e. total sum ofofficial reserve assets) as reported by theEurosystem will be consistent with Table 8.6 ofthe ECB�s Monthly Bulletin.

The criterion for deciding on the residency ofthe counterpart could not result in sostraightforward a manner, especially in the caseof financial derivatives dealt in organisedmarkets. As a rule, financial derivatives dealt inorganised markets located outside the euroarea may be considered to fall within thiscategory. In the event that, in certain cases,information on the residency of the market isnot available to the NCBs, the geographicalallocation of claims and drains arising fromfinancial derivatives could be based on theresidency of the clearing house.

As regards positions in financial derivativesdenominated in foreign currency vis-à-visresident counterparts, they would be disclosedin the template under item I.B (�Other foreigncurrency assets�) of Section I. Predeterminedand contingent short-term net drains vis-à-visresident counterparts would be disclosed inSections II and III respectively.

The main goal of this chapter is not to focus onan exhaustive coverage of financial derivatives,but rather to cover the methodologicaltreatment of those derivatives most usuallypresent in the portfolio of an NCB, as far as


holdings of reserve assets are concerned. Thestructure of this chapter is determined by thedifferent types of financial derivatives beinganalysed in each bullet point:

� Options� Futures� Interest rate derivatives (interest rate

swaps, cross currency swaps andforward rate agreements)

� Forward foreign exchange contracts� Swaps foreign exchange against

domestic currency

i) OptionsThis kind of contract gives the purchaser theright, but places no obligation on him/her, tobuy (�call�) or sell (�put�) an asset at apredetermined price (strike price) within aspecific period of time or on a specified date.Symmetrically, the seller would be obliged, butwould not have the right, to deliver (call) oracquire (put) the asset at the agreed price if thebuyer of the option decided to exercise it (andhe would logically do so only if the option were�in-the-money�).

In accordance with the above-mentioned paperentitled �Final report on financial derivatives�,two types of options may be considered:exchange-traded options and over-the-counter(OTC) options. Exchange-traded options arepackaged in fixed quantities and have a fixedrange of dates; they could be margined options-style (in this case, an initial premium would bepaid to the seller of the option and dailyvariation margins could be covered by collateralinstead of cash) or futures-style (no initialpremium required and variations are settled incash). By contrast, OTC options can adapt toeach customer�s requirement and are thus notcommonly traded on secondary markets.

Only those options settled in at least one foreigncurrency and negotiated with non-residentcounterparts would be relevant as regardsreserve assets. OTC options and exchange-traded options with options-style margininginvolve a payment of the premium up front. Atthe beginning of the contract, the central bankbuying an option would record in the b.o.p. the

full premium paid (i.e. the purchase price plusthe implied service charge) under �Reserveassets/Foreign exchange/Financial derivatives�(that recording would be derived from theacquisition of a financial asset). If a central banksells an option (�option written� by the NCB),according to the above-mentioned net-basistreatment, the premium received would then besymmetrically recorded under �Reserve assets/Foreign exchange/Financial derivatives� with anegative sign (accounting for a liability).

In options-style margining, cash marginpayments and receipts associated with optionsshould be classified in the b.o.p. under �Reserveassets/Foreign exchange/Currency anddeposits�15. Options-style variation marginswould be considered to be deposits providedthat no real change in ownership occurs beforethe conclusion of the contract. When thecontract expires, this ownership would then bedefinitively transferred if required.

If the owner finally exercises the option and theunderlying asset is delivered, this transactionshould be recorded in the b.o.p. under theappropriate item at the prevailing market price.If the underlying asset corresponds to a specificamount of foreign currency, its delivery shouldbe recorded under �Reserve assets/Foreignexchange/Currency and deposits�, valued accordingto the foreign exchange rate prevailing in the market.

The difference between the market price andthe strike price should be recorded under�Reserve assets/Foreign exchange/Financialderivatives�, irrespective of whether it implies apayment or a receipt. This treatment would bethe same for both call and put (either boughtor written) options.With regard to the treatment of stocks,options contracts should be valued at marketprices within the i.i.p. The statistical treatmentin the template could be summarised asfollows:


14 If the claim arising from the credit line were not liquidenough to be considered as a reserve asset, it should bereported in Section II, under item II.1.


(i) Sections I (I.A.(5) �Other reserve assets/Financial derivatives�) and IV (IV.(1).(e)�Memo items/Financial derivative assets(net, marked to market)�) shoulddisclose the market value of the optionon a net basis (with a plus or minus sign,accounting for bought or writtenoptions respectively).16

(ii) In the case of options in foreigncurrency vis-à-vis the domestic currency,if the remaining maturity of somepotential payments/receipts were lowerthan one year, a net contingent foreigncurrency drain equivalent to thepossible amount of foreign currency tobe obtained/delivered (and not to themarket value of the derivative) shouldbe separately disclosed in Section III aswell (III.4 �Aggregate short and longpositions of options in foreigncurrencies vis-à-vis the domesticcurrency))�.17

(iii) In the case of potential payments/receipts with a remaining maturity ofover one year, they should be disclosedin Section IV (IV.(1).(f) �Derivatives [...]that have a residual maturity greaterthan one year, which are subject tomargin calls�), if they are subject tomargin calls

(iv) In the case of exchange of cash margins,they should be treated as deposits and,thus, included in Section I (I.A.(1).(b)�Official reserve assets/Total currencyand deposits�)

The statistical treatment of futures-styleoptions is similar to that for futures, which isexplained in detail in the following paragraphs.

ii) FuturesA futures contract is a standardised form of aforward agreement traded on organisedmarkets. For this kind of contract, one party hasthe obligation to purchase and the other, theobligation to sell a specified quantity of an assetat a fixed price on a fixed future date. The maindifferences between this and other forwardcontracts stem from the fact that in futures theterms of the contract are standardised, there is

a centralised exchange of trading contracts ledby the market and each contract is subject toregular margining.

Organised futures markets do not provide anyinformation on the counterpart. A clearinghouse searches in the market for oppositeorders and matches them. The balance sheetsof both transactors account for oppositepositions vis-à-vis the market. Therefore,information on the residency of eachcounterpart is not available and hence itbecomes necessary to establish a criterionaccording to which these transactions could beconsidered to be reserve assets: onlytransactions in futures settled in at least oneforeign currency and traded on markets placedoutside the euro area could be reported asflows/stocks under �Reserve assets�.

Variation margins on futures are not statisticallytreated as those on options: although initialmargin payments would be computed aschanges in deposits, futures-style variationmargin payments should be recorded under�Reserve assets/Foreign exchange/Financialderivatives�. This stems from the fact that dailyvariation margin payments are usually collectedby the clearing house from one party and paidto the other, accounting for an actual change inownership.

This treatment for variation margins would beconsistent with market stock values near tozero at the end of each day (this stems fromthe fact that unrealised profits and lossesduring the day would in the end becomerealised and transferred to the correspondingcounterpart). Hence, there would be norecording of stocks on futures with dailymargining.

Therefore, in order to summarise thestatistical treatment of futures, all transactionsassociated with these kinds of derivativesshould be recorded in the b.o.p. under

17 In the case of American-style options (which can beexercised at any time from inception to maturity),contingent inflows and outflows should be allocated tothe first column of Section III (i.e. residual maturity up toone month).


�Reserve assets/Foreign exchange/Financialderivatives�, regardless of the way in whichthey are settled (either taking up an oppositefutures position before maturity to offset theexisting obligation, with delivery of theinstrument or by means of an equivalent cashpayment). If the instrument were delivered,only the difference between the agreed priceand the market price of the instrument at theend of the contract would be allocated totransactions in �Reserve assets/Financialderivatives�. No entry would be recorded inthe i.i.p. In the Eurosystem�s template, onlypredetermined outflows/inflows in foreignexchange (i.e. the nominal value of futurecontracts on foreign exchange) would bedisclosed under item II.2, �Aggregate shortand long positions in forwards and futures inforeign currencies vis-à-vis the domesticcurrency� (including the forward leg ofcurrency swaps).

iii) Interest rate derivatives (Interest rate swaps,cross-currency swaps and forward rate agreements)Swaps are agreements to exchange sets of cashflows. In the case of cross-currency swaps, theprincipal is exchanged at the inception of thecontract, unlike interest rate swaps. Interestpayments corresponding to swap agreementsare usually carried out on a net basis. FRAs areagreements whereby the interest associatedwith a deposit is purchased/sold at apredetermined price on an agreed future date.Both swaps and FRAs usually end at maturity.

Some agents use these instruments for hedgingpurposes when having to contend with variablestreams of interest payments which are indexedin some way � or, in the case of cross-currencyswaps, streams of payments in foreign currency. Bymeans of these contracts, investors may manageto pay a fixed interest rate/foreign exchange rateinstead of a variable one. However, in many casesno other transaction (involving interest/foreignexchange payments) justifies the existence of thiskind of contract, the only purpose of which wouldthen be to contribute to the agent�s activeportfolio management.

These financial derivatives normally take theform of over-the-counter contracts. Two

criteria should be observed in order toconsider swaps and FRAs as reserve assets:currency of settlement of the contract (at leastone non-euro area currency) and residency ofthe counterpart (outside the euro area).

In this case, and following both ECB and IMFrecommendations, the net stream of cash settlementflows associated with interest rate derivatives shouldbe recorded in the b.o.p. under �Reserve assets/Foreign exchange/Financial derivatives� (rather thanunder the �Current account�).

In the case of cross-currency swaps, theinterest rate element associated with thesetransactions would have to be recorded in theb.o.p. under �Reserve assets/Foreign exchange/Financial derivatives� (in those contractssettled in at least one foreign currency andconducted with non-resident counterparts). Inaddition, the difference between the two legscorresponding to the principal exchanged interms of the base currency, if applicable, shouldalso be recorded under �Reserve assets/Foreign exchange/Financial derivatives�.

All these derivatives with an interest ratecomponent might register positive and negativevalues along the life of the contract. Taking thisfeature into account, they would be mirroredunder the following items of the template:(i) in Sections I and IV, the market price of

these derivatives should be disclosedrespectively in �Official reserve assets/Other reserve assets� (I.A.(5)) and in�Financial derivative assets� (net, markedto market) (IV.(1).(e)). In those cases inwhich no market value is available,estimates should be based on thecurrent value of the stream of payments/receipts, deduced from the differencebetween the agreed rates and theforward market rates to the date ofeach settlement;18

(ii) in the case of cross-currency swaps, ifthe remaining maturity of somepredetermined payments/receipts werelower than one year, these net drains of

18 When the transaction is settled, it involves changes inforeign exchange holdings (i.e. changes in I.A.(1).(b)).


foreign currency (either positive ornegative) should be reflected in SectionII, under aggregate short and longpositions in forwards and futures inforeign currencies vis-à-vis the domesticcurrency (including the forward leg ofcurrency swaps [II.(2)];.

(iii) in the case of potential payments/receipts of a forward with remainingmaturity of over one year subject tomargin calls, they should be disclosed inSection IV (IV.(1).(f) �Derivatives [...]that have a residual maturity greaterthan one year, which are subject tomargin calls�).

As the template on international reserves andforeign currency liquidity focuses on the riskassociated with changes in foreign exchangerates, positions associated with the interest ratecomponent of these financial derivatives wouldnot give rise to any recording under Section II,provided that no predetermined foreignexchange inflows/outflows derives from it.

iv) Forward foreign exchange contractsBy means of these contracts, two agents agreeon the delivery of a specified amount of foreigncurrency at a fixed exchange rate on an agreedfuture date. Transactions only occur at maturitywhen the terms of the contract are executed.At that moment, the market and the agreedrates are normally different, which is what givesthe financial derivatives either a positive or anegative value.

The difference between the amount ofdomestic currency to be delivered, as agreed atthe time of the contract, and the amount offoreign exchange to be received, valued intodomestic currency at the spot rate prevailing atsettlement should be allocated to transactionsin Reserve assets/Foreign exchange/Financialderivatives.

As in the case of derivatives with an interestcomponent, either positive or negative valuesat maturity are possible. It is necessary toconsider these transactions in several parts ofthe template:

(i) in Sections I and IV, the market price ofthe derivative should be recordedrespectively under �Official reserveassets, Other reserve assets� (I.A.(5))and under �Financial derivative assets(net, marked to market)� (IV.(1).(e)). Themarket price of these derivatives couldbe deduced from the differencebetween the forward foreign exchangerate to the end of the contract and theagreed rate;

(ii) if the remaining maturity of somepayments were lower than one year, thenominal value of the predetermined netdrains should be reflected in Section II,under �Aggregate short and longpositions in forwards and futures inforeign currencies� (II.(2)).

(iii) In the case of payments/receipts withremaining maturity of over one year, ifthese contracts were subject to margincalls, they should be disclosed in SectionIV (IV.(1).(f) �Derivatives [...] that have aresidual maturity greater than one year,which are subject to margin calls�).

In the case of forwards between domesticcurrency and any other foreign currency, somedoubts could arise as regards the valuation intoeuro of the predetermined foreign exchangeinflows/outflows to be included in Section II ofthe template. Two possible rates could be used:i) the agreed foreign exchange rate of thecommitment (i.e. the euro leg of the agreementwould be used to express the amount offoreign currency in euro); and ii) the prevailingmarket rate. In accordance with IMF guidelineson this issue, the latter (i.e. the mid-pointforeign exchange rate of the last day of theperiod covered by the template) should beused to convert the foreign exchange leg of theagreement into euro.

v) Swaps foreign exchange against domesticcurrencyThe statistical treatment of these transactionswould be equivalent to considering independentspot and forward purchases/sales of foreignexchange against domestic currency. At themoment of delivery, an increase/decrease inforeign exchange would be reflected in the b.o.p.


under �Reserve assets/Foreign exchange/Currency and deposits�. The difference betweenthe price agreed and the market price of thetransaction would be reflected under �Reserveassets/Foreign exchange/Financial derivatives�.

As regards the template, these transactionswould be reflected in the following sections:

(i) in Sections I and IV, the market price ofthe derivative should be recordedrespectively under �Official reserveassets, other reserve assets� (I.A.(5))and under �Financial derivative assets(net, marked to market)� (IV.(1).(e)) on amarked-to-market basis. The marketprice of these derivatives could be

deduced taking into account thediscounted stream of payments/receiptsderived from the difference between themarket forward foreign exchange rateto each date of delivery and the agreedrate;19

(ii) if the remaining maturity of somepayments/receipts were lower than oneyear, the forward leg of the swap (i.e. theamount of foreign exchange to bedelivered, either positive or negative)should be reflected in Section II, under�Aggregate short and long positions inforwards and futures in foreign currenciesvis-à-vis the domestic currency (includingthe forward leg of currency swaps)�(II.(2)).20

19 When the transaction is settled, it involves changes inforeign exchange holdings [i.e. changes in I.A.(1).(b)].

20 To value predetermined foreign exchange inflows/outflows into euro, prevailing market foreign exchangerates should be used.


III.7 Summary

Positions/transactions in gold

Type of transaction Statistical Involved items of Involved Other remarksconsideration the b.o.p./i.i.p. items of

the template

Gold purchases and sales Outright transaction Reserve assets / I.A.(4) �(Counterpart: extra- Monetary goldEMU NCB)

Gold purchases and sales Outright transaction Reserve assets / I.A.(4) Monetisation /(Counterpart: extra- Current account / Demonetisation of theEMU non-NCB) Goods gold required

Gold purchases and sales Trade in goods Current account / � �between residents (non- GoodsNCB) and non-residents

Gold swaps Collateralised loans Reserve assets / I.A.(1).(b) No gold recordings inForeign exchange / II.3.(i)/(ii) either the b.o.p. orCurrency and deposits IV.(I).(d)21 the i.i.p.Other investment /Liabilities / Monetaryauthorities / Currencyand deposits

Gold repos Collateralised loans Reserve assets / I.A.(1).(b) Nol gold recordings inForeign exchange / II.3.(i)/(ii) either the b.o.p. orCurrency and deposits IV.(1).(d) the i.i.p.Other investment /Liabilities / Monetaryauthorities / Currencyand deposits

Gold loans and deposits Exchange of � IV.(1).(d) No changes in goldcollateral holdings in either the

b.o.p. or the i.i.p.

21 Accounting for the amount of gold exchanged


Positions/transactions vis-à-vis the IMF (including, SDR)


the template

SDRs� account Equivalent to Reserve assets / Special I.A.(3) �a foreign currency Drawing Rightsaccount

Allocation / cancellation Other adjustments Reserve assets / Special I.A.(3) Only stock changesof SDRs Drawing Rights (i.i.p./template)

Foreign currency drawn Reallocation of Reserve assets / Reserve I.A.(2) �upon the reserve position resources position in the IMF I.A.(1).(b)in the IMF Reserve assets / Foreign

exchange / Currency anddeposits

Indebtedness of the Fund Reserve position in Reserve assets / Reserve I.A.(2) Although settled inunder NAB or GAB the Fund position in the IMF domestic currency, itagreements Other investment / Currency gives rise to a claim in

and deposits foreign currency

Indebtedness of the Fund Deposit in Foreign Reserve assets / Foreign I.A.(1).(b).(i) Although settled inunder the ESAF agreement exchange in the Fund exchange / Currency and domestic currency, it

deposits gives rise to a claim inOther investment / foreign currencyCurrency and deposits

��

Positions/transactions in securities


the template

Accrued interest on Higher value of the Current account / Investment I.A.(1).(a) –securities security involved Income / Other investment

Res. Assets / Foreignexchange / Securities

Positions/transactions in currency and deposits


the template

Repo type transactions/ Collateralised loans Reserve assets / Foreign I.A.(1).(b) Initial amount of cashpositions (Repo, sell-buy exchange / Currency and II.3.(i)/(ii) delivered as a proxy ofback and security lending deposits IV.(1).(d) the value of collateraltransactions-positions with Other investment / Liabilities /exchange of cash) in foreign Mon. Authorities / Curr. andcurrency Deposits

Credit lines Predetermined Reserve assets / Foreign I.A.(1).(b)22 · If any collateralclaims/liabilities once drawn claims/liabilities once exchange / Currency and I.A.(1).(b)/I.A.(5)/ required, securitiesupon; contingent net drains drawn upon; contingent deposits II.123 lent / repoed would beup until then net drains up until then Other investment / Assets / III.(3) recorded under item

Liabilities / Mon. Authorities / IV.(I).(d) of the templateCurr. and Deposits without any additional

recording in the b.o.p.or the i.i.p.

Foreign currency notes Claims on other NCBs Reserve Assets / Foreign I.A.(1).(b).(i) –and coins exchange / Currency

and deposits

22 Accounting for the change in foreign exchange holdings, once drawn upon.23 Either in Section I (as a deposit or a loan) or II, depending on the liquidity of the claim arising, once drawn upon.

��

Positions/transactions in derivatives


the template

Options Contingent net drains Reserve assets / Foreign I.A.(1).(b) Margins would beexchange / Currency and I.A.(5) treated as deposits indeposits24 · III.4 foreign currencyReserve assets / Foreign IV.(1).(e)exchange / Financial IV.(1).(f)25

Derivatives

Futures Positions settled on Reserve assets / Foreign I.A.(1).(b) No stocks should bea daily basis exchange / Currency and computed on futures

deposits26 · with daily margining.Reserve assets / Foreignexchange / Fin. Deriv.

Interest rate swaps, Cross- Predetermined net Reserve assets / Foreign I.A.(1).(b) –currency swaps and drains exchange / Currency and I.A.(5)Forward rate agreements deposits II.(2)27

Reserve assets / Foreign IV.(1).(e)exchange / Financial IV.(1).(f)Derivatives

Forward Foreign exchange Predetermined net Reserve assets / Foreign I.A.(1).(b) –contracts drains exchange / Currency and I.A.(5)

deposits II.(2)Reserve assets / Foreign IV.(1).(e)exchange / Financial IV.(1).(f)Derivatives

Swaps domestic currency / Independent spot and Reserve assets / Foreign I.A.(1).(b) –Foreign exchange forward purchases exchange / Currency and I.A.(5)

and sales deposits II.(2)Reserve assets / Foreign IV.(1).(e)exchange / FinancialDerivatives

24 If settled by means of foreign exchange deposits / foreign exchange delivery.25 In the case of derivatives subject to margin calls with residual maturity over one year.26 Accounting for daily settlements in foreign exchange.27 Only the foreign exchange component of cross-currency swaps would give rise to entries under Section II.

��

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�� "�,��-�� +� ��./'0**�1�� 2�� 3�� 4�� ./'� �� "�,� �-�� # $�5��067�

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COUNTRY A (in EUR)Monthly b.o.p. 31 December 1999 Credit Debit Balance

Fin. acc. / Other inv. / Liab. / Mon. auth. / Loans & deposits 28 5,859,000 5,859,000

Reserve assets / Monetary gold 5,580,000 -5,580,000

Reserve assets / Foreign exchange / Currency and deposits 279,000 -279,000

28 Recording interest income on an accrual basis is not required within the euro area other investment account.

!�� 3��)� �� '��3�� 53�� 7��

3�� !�� 3��0��3�� 5�� 7�

COUNTRY A (in EUR)Monthly b.o.p. 31 January 1999 Credit Debit Balance

Current account / Investment income / Other investment 2,760 4,600 -1,840

Fin. acc. / Other inv. / Liab. / Mon. auth. / Loans & deposits 276,000 -276,000

Reserve assets / Foreign exchange / Currency and deposits 280,600 2,760 277,840

@�� ,�� !�"A��3��0*1%%1%(((�� 1�B��1

@��3��1�:��1@��C�'��-.�D&**+***+***

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� ��1��1�� ./'&*+***+***�5E-.�D?G+***+***7�5�� !��;�,7

� ��1��1/��./'�%**+***+***5E-.�D(>+***+***7


The reconciliation between flows and stocks in the i.i.p. of country �A� would reflect the followingentries:

COUNTRY A (in EUR)

IIP Stock BOP flows Price Exchange Other Stock30.11.99 changes rate adjustm. 31.12.99

changes29

Fin. acc. / Other inv. / Liab. / Mon. auth. /Loans & dep. 500,000,000 5,859,000 - -189,000 - 05,670,000

Reserve assets / Monetary gold 7,200,000 -5,580,000 - -630,000 - 12,150,000

Reserve assets / Foreign exchange /Securities 96,000,000 - - -6,000,000 - 90,000,000

Reserve assets / Foreign exchange /Currency and dep. 48,000,000 -279,000 - -3,009,000 - 45,270,000

IIP Stock BOP flows Price Exchange Other Stock31.12.99 changes rate adjustm. 31.01.00

changes

Fin. acc. / Other inv. / Liab. / Mon. auth. /Loans & dep. 505,670,000 -276,000 - + 246,000 - 05,640,000

Reserve assets / Monetary gold 12,150,000 - +211,50030 +540,00031 - 12,901,500

Reserve assets / Foreign exchange /Securities 90,000,000 - - +4,000,000 - 94,000,000

Reserve assets / Foreign exchange /Currency and dep. 45,270,000 277,840 - +2,005,96032 - 46,998,120

In the template reported by country �A�, the entries corresponding to the captions involved in thisexample would be the following:

Template 30/11/1999 Description Value33

I.A.(1).(a) Official reserve assets / Foreign currency reserves (in convertibleforeign currencies) / Securities 96,000,000

I.A.(1).(b) Official reserve assets / Foreign currency reserves (in convertibleforeign currencies) / Deposits 48,000,000

I.A.(4) Official reserve assets / Gold (including gold on loan) 7,200,000

29 Exchange rate changes are computed according to the following formula:Fxt = St-1 * (Et - Et-1) - Ft * (Et � E�t)Where:Fxt = Exchange rate changesSt-1 = Initial stock (in original currency)Et-1 = Opening mid-point foreign exchange rate EUR /USD (corresponding to the last day of the previous period)Et = Closing mid-point foreign exchange rate EUR /USD (corresponding to the last day of the period)Ft = Flows during the period (in original currency), including the b.o.p. sign (- sign for outflows and + sign for inflows)E�t = Average foreign exchange rate of the period (at which transactions are valued into EUR)

30 This result derives from the following calculations: 45,000* (305 � 300) * 0.94.31 This result derives from the following calculations: 45,000* 300 * (0.94 � 0.9).32 Which comes from: 50,000,000*(0.94 � 0.9) + 300,000*(0.94 � 0.92) � 2,000*(0.94 � 0.92).33 In EUR.


Template 31/12/1999 Description Value

I.A.(1).(a) Official reserve assets / Foreign currency reserves(in convertible foreign currencies) / Securities 90,000,000

I.A.(1).(b) Official reserve assets / Foreign currency reserves(in convertible foreign currencies) / Deposits 45,270,000


II.1.(i) Predetermined short-term net drains on f.c. assets (nominal value) /for. cur. loans, secur. and dep. / Outflows(-) principal(More than three months and up to one year) -5,400,000

II.1.(ii) Predetermined short-term net drains on f.c. assets (nominal value) /for. cur. loans, secur. and dep. / Outflows(-) Interest(More than three months and up to one year) -162,00034

II.3.(i) Predetermined short-term net drains on f.c. assets(nominal value) / Other / Outflows related to repos (Up to one month) - 270,00035

II.3.(ii) Predetermined short-term net drains on f.c. assets(nominal value) / Other / Inflows related to reverse repos(Up to one month) 2,70036

IV.(1).(d).(i) Memo items / securities lent or repoed and included in Section I 2,970,00037

IV.(1).(d).(iv) Memo items / securities borrowed or acquired under repoagreements but not included in Section I 2,790,000





II.1.(i) Predetermined short-term net drains on f.c. assets(nominal value) / for. cur. loans, secur. and dep. / Outflows(-) principal(More than three months and up to one year) -5,640,000

II.1.(ii) Predetermined short-term net drains on f.c. assets (nominal value) /for. cur. loans, secur. and dep. / Outflows(-) interest(More than three months and up to one year) -169,200

34 Accounting for the income associated with the six-month deposit of the Bank of England in �A�.35 Accounting for the foreign exchange drain corresponding to the repurchase of gold, in transaction 3, valued at the gold price

prevailing in the market on 31/12/1999 (i.e. - USD 300,000).36 Accounting for the future receipt of foreign exchange corresponding to the interest involved in transaction 2 (+ USD 3,000).37 Corresponding to both the gold lent in transaction number 2, and the gold swapped in transaction number 3.


IV.2 Credit lines

An NCB �A� of the euro area enters into areciprocal currency arrangement with theUnited States Federal Reserve for two months,which provides �A� with temporary access toUSD up to the limit of the credit line. At thesame time, the Federal Reserve wouldcorrespondingly have access to EUR up to thelimit of this commitment. This agreement is formonetary purposes and would be used in caseany of these currencies needed support in themarket. If the credit line were drawn on by oneof the countries, the cash borrower would haveto deliver a proportional amount of collateral(i.e. securities) to the counterpart. At the endof the agreement, those amounts drawn onmust be redeemed. These are the features ofthe commitment:

� Agreement date: 15 December 1999� Upper limit of the arrangement in USD:

10,000,000,000� Upper limit of the arrangement in EUR:

9,300,000,000� Type of collateral: US treasury bills38

� End of the agreement: 15 February 2000

On 10 January, country A withdraws USD1,000,000,000 from the credit line provided bythe Federal Reserve. On 28 January, the FederalReserve draws on EUR 4,000,000,000. Bothtransactions are settled by means of deposits in

J. P. Morgan, New York. On 15 February, bothloans are redeemed. No more transactions takeplace.

Information on exchange rates:

Date Monthly average Mid-point foreignexchange rate exchange rateEUR/USD EUR/USD

30/11/99 - 0.96 12/99 0.93 -31/12/99 - 0.90 01/00 0.92 -31/01/00 - 0.94 02/00 0.95 -28/02/00 - 0.95

Nothing is recorded in the b.o.p. of the countryof �A� until one of the credit lines is drawn on.When the Federal Reserve withdraws EUR,there is no entry in the b.o.p. of the country of�A� as well, which only registers a substitutionof a claim on a non-resident private creditinstitution (a deposit in JP Morgan) by anotherclaim on a non-resident monetary authority(the Federal Reserve), both of them classifiedunder the same item of the b.o.p. anddenominated in EUR. Delivery of collateralwould also not be at the origin of any recording.Therefore, the b.o.p. only registers thefollowing entries:

38 Information on the market value of the collateral is notprovided, in order to keep this example as close to reality aspossible (the lack of accounting information on this matterusually occurs in practice). If the market value of thesesecurities were available, it should be used to assess them.


COUNTRY A (in EUR)

Monthly b.o.p. 31 January 1999 Credit Debit Balance

Fin. acc. / Other inv. / Liabilities / Mon. auth. / Loans & deposits 920,000,000 920,000,000

Reserve assets / Foreign exchange / Currency and deposits 920,000,000 -920,000,000

b.o.p. 28 February 1999 Credit Debit Balance

Fin. acc. / Other inv. / Liab. / Mon. auth. / Loans & deposits 950,000,000 -950,000,000

Reserve assets / Foreign exchange / Currency and deposits 950,000,000 950,000,000

Let us suppose the following stocks in theNCB�s balance sheet as at 30/11/1999:

� Financial account / Other investment /Assets / Monetary authorities / Loans &deposits: EUR 60,000,000,000

� Financial account / Other investment /Liabilities / Monetary authorities /Loans & deposits: EUR 50,000,000,000

� Reserve assets / Foreign exchange /Currency and deposits: USD5,000,000,000 (=EUR 4,800,000,000)

� Reserve assets / Foreign exchange /Securities: USD 10,000,000,000(=EUR 9,600,000,000)


The reconciliation between flows and stocks in the i.i.p. of country �A� would register thefollowing entries:

COUNTRY A (in EUR)

IIP Stock b.o.p. flows Price Exchange Other Stock30/11/99 changes rate changes adjust. 31/12/99

Fin. acc. / Other inv. / Assets /Mon. auth. / Loans & deposits 60,000,000,000 - - - - 60,000,000,000

Fin. acc. / Other inv. / Liab. / Mon. auth. / Loans & deposits 50,000,000,000 - - - - 50,000,000,000

Reserve assets / Foreign exchange /Securities 9,600,000,000 - - -600,000,000 - 9,000,000,000

Reserve assets / Foreign exchange /Currency and dep. 4,800,000,000 - - -300,000,000 - 4,500,000,000

IIP Stock b.o.p. flows Price Exchange Other Stock 31/12/99 changes rate changes adjust. 31/01/00


Fin. acc. / Other inv. / Liab. /Mon. auth. / Loans & dep. 50,000,000,000 920,000,000 - + 20,000,000 - 50,940,000,000

Reserve assets / Foreign exchange /Securities 9,000,000,000 - - +400,000,000 - 9,400,000,000

Reserve assets / Foreign exchange /Currency and deposits 4,500,000,000 -920,000,000 - + 220,000,000 - 5,640,000,000

IIP Stock b.o.p. flows Price Exchange Other. Stock 31/01/00 changes rate changes adjust. 28/02/00


Fin. acc. / Other inv. / Liab. /Mon. auth. / Loans & deposits 50,940,000,000 -950,000,000 - + 10,000,000 - 50,000,000,000

Reserve assets / Foreign exchange /Securities 9,400,000,000 - - +100,000,000 - 9,500,000,000

Reserve assets / Foreign exchange /Currency and dep. 5,640,000,000 950,000,000 - + 60,000,000 - 4,750,000,000


In the template reported by country �A�, the entries corresponding to the captions involved in thisexample would be:


I.A.(1).(a) Official reserve assets / Foreign currency reserves(in convertible foreign currencies) / Securities 9,600,000,000

I.A.(1).(b) Official reserve assets / Foreign currency reserves(in convertible foreign currencies) / Deposits 4,800,000,000




III.3.(A).(a).(i) Undrawn, unconditional credit lines / provided by othernational monetary authorities, BIS, IMF and other int.organisations/Other int. organisations40 + 9,000,000,000




II.1.(i) Predetermined short-term net drains on f.c. assets (nominal value) /Foreign currency loans, securities and deposits / Outflows (-), principal(Up to one month) - 940,000,000

III.3.(A).(a).(i) Undrawn, unconditional credit lines / provided by other nationalmonetary authorities, BIS, IMF and other int. organisations/Other int. organisations + 8,460,000,000

IV.(1).(d).(i) Memo items / securities lent or repoed and included in Section I41 940,000,000

IV.(1).(d).(iv) Memo items / securities borrowed or acquired under repoagreements but not included in Section I42 4,086,956,522



I.A.(1).(b) Official reserve assets / Foreign currency reserves (in convertible foreign currencies) / Deposits 4,750,000,000

39 In EUR.40 The other leg of the agreement (i.e. the credit line in EUR provided to the Federal Reserve) would not be reflected in the common

template, because it does not imply any contingent drain in foreign currency. In case of any other credit line provided by the NCB �A�in foreign currency (either to a resident or a non-resident entity) should be separately disclosed under item III.3.(B).

41 The value of the collateral derives from the amount of cash transferred at the beginning of the transaction, valued into EUR using themid-point exchange rate of 31/1/2000.

42 This recording corresponds to the amount of US Treasury bonds received from the Federal Reserve. In this example the value isderived from the amount withdrawn by the Federal Reserve (EUR 4,000,000,000) valued into USD at the average rate EUR/USD ofthe period when the transaction took place and valued again into EUR using the mid-point foreign exchange rate EUR/USD of the lastday of the reference period. Notice that, though the transaction is denominated in EUR, the securities exchanged as collateral aredenominated in foreign currency (and, therefore, must be considered in the common template)


IV.3 Repurchase agreements

a) An NCB �A� of the euro area entersinto a one-month repo with a non-EMUcentral bank �B� (the cash provider)with the following features:

� Agreement date: 15 December 1999� Amount of cash transferred from �B� to

�A�: USD 3,000,00043

� Type of collateral delivered to �B�: UStreasury bills44

� Maturity date: 15 January 2000� Agreed repurchase price: USD

3,015,000

b) In addition, �A� enters into a 21-dayreverse repo with a non-EMU centralbank �C� (cash borrower), with thefollowing details:

� Agreement date: 20 December 1999� Amount of cash transferred from �A�

to �C�: USD 1,000,00045

� Type of collateral delivered by �C�: UStreasury bills46

� Maturity date: 10 January 2000� Agreed repurchase price: USD

1,003,000

Information on foreign exchange rates:

Date Monthly average Mid-point foreignexchange rate exchange rateEUR/USD EUR/USD

30/11/99 - 0.9612/99 0.93 -

31/12/99 - 0.901/00 0.92 -

31/1/00 - 0.94

The following entries would be recorded in the b.o.p. statement of country �A�47:

COUNTRY A (in EUR)

Monthly b.o.p. 31 December 1999 Credit Debit Balance

Fin. acc. / Other inv. / Liab. / Mon. auth. / Loans & dep. 2,790,000 2,790,000

Reserve assets / Foreign exchange / Currency and dep. 2,790,000 -2,790,000

31 January 1999 Credit Debit Balance

Current account / Investment income / Other investment48 2,760 13,800 -11,040

Fin. acc. / Other inv. / Liab. / Mon. auth. / Loans & deposits 2,760,000 -2,760,000


47 Reverse-repo transactions would not give rise to any b.o.p. recording (one claim would be substituted by another, both classifiedunder the same b.o.p. item).

48 Recording interest income on an accruals basis is not required within the euro area �Other investment� account.

43 By crediting a current account held by �A� in a non-residentprivate bank.

44 No information on the market value of repoed securities isprovided.

45 By debiting a current account held by �A� in a non-residentprivate bank.

46 No information on the market value of repoed securities isprovided.


Let us suppose the following stocks in theNCB�s balance sheet as at 30/11/1999:� Financial account / Other investment /

Liabilities / Monetary authorities /Loans & deposits: EUR 500,000,000

� Reserve assets / Foreign exchange /

Currency and deposits: USD50,000,000 (=EUR 48,000,000)

� Reserve assets / Foreign exchange /Securities: USD 100,000,000(=EUR 96,000,000)

The reconciliation between flows and stocks in the i.i.p. of country A would reflect the followingentries:

COUNTRY A (in EUR)

IIP Stock BOP flows Price Exchange Other Stock 30.11.99 changes rate changes adjust. 31.12.99

Fin. Acc. / Other Inv. / Liab. /Mon. Auth. / Loans & Dep. 500,000,000 2,790,000 - -90,000 - 502,700,000

Reserve assets / Foreign exchange /Securities 96,000,000 - -6,000,000 - 90,000,000

Reserve assets / Foreign exchange /Currency and Dep. 48,000,000 -2,790,000 - -3,090,000 - 47,700,000

IIP Stock BOP flows Price Exchange Other. Stock31.12.99 changes rate changes adjust. 31.01.00

Fin. Acc. / Other Inv. / Liab. /Mon. Auth. / Loans & Dep. 502,700,000 -2,760,000 - + 60,000 - 500,000,000

Reserve assets / Foreign exchange /Securities 90,000,000 - +4,000,000 - 94,000,000

Reserve assets / Foreign exchange /Currency and Dep. 47,700,000 2,771,040 - + 2,059,76049 - 46,988,720

49 This result derives from the following calculations: 53,000,000*(0.94 - 0.90) + (-3,012,000)*(0.94 � 0.92)


In the template to be reported by country A, the entries corresponding to the captions involved inthis example would be:


I.A.(1).(a) Official Reserve assets / Foreign currency reserves(in convertible foreign currencies) / Securities 96,000,000

I.A.(1).(b) Official Reserve assets / Foreign currency reserves(in convertible foreign currencies) / Deposits 48,000,000


I.A.(1).(a) Official Reserve assets / Foreign currency reserves(in convertible foreign currencies) / Securities 90,000,000


II.3.(i) Predetermined short-term net drains on foreign currency assets(nominal value) / Other / Outflows related to repos (-) - 2,713,50050

IV.(1).(d).(i) Memo items / Securities lent and on repo / Lent or repoedand included in Section I 2,700,000

IV.(1).(d).(iv) Memo items / Securities lent and on repo / Borrowed or acquiredbut not included in Section 1 900,000




50 Accounting for the repurchase price of the transaction. In the event that it was not available, the initial price of the transaction wouldbe accepted as a proxy.

IV.4 Interest rate swaps

Let us assume that an NCB �A� of the euroarea agrees a four-year interest rate swaps(IRS) for USD 10 million with a non-resident on1 December 1999. The NCB agrees to pay thefixed rate of 6% and receive the indexed rate(average of daily overnight settings for therelevant period) in order to hedge itself againstinterest payments derived from a loan taken indollars, at a variable rate. The contract detailsare as follows:

� Agreement date: 1 December 1999� Notional amount: USD 10,000,000� IRS start date: 1 January 2000� IRS maturity date: 31 December 2004� Interest paid annually on 31 December

The contract is settled by means of payments/receipts in compensation for the differencebetween the fixed and the indexed rates (�A�credits/debits an account denominated in USDin a correspondent private bank settled in theUnited States).


The flows corresponding to the swap would be as follows (for the sake of simplicity, all calculationshave been performed on an annual basis):

Principal USD 10,000,000 Fixed rate: 6.0%

(1) (2) (3) (4) (5)

Date Remaining Index (market) Annual average Flows51, 52

maturity spot interest rate rate EUR/USD

31/12/99 4 years 5.8% 0.9 -31/12/00 3 years 5.3% 0.9 -63,00031/12/01 2 years 5.5% 0.8 -40,00031/12/02 1 years 6.3% 0.8 +24,00031/12/03 - 6.5% 0.9 +45,000

The NCB would record in its balance of payments for the years 1999-2003:

COUNTRY A (in EUR)

b.o.p. 31 December 2000 Credit Debit Balance

Reserve assets / Foreign exchange / Currency and deposits 63,000 - 63,000

Reserve assets / Foreign exchange / Financial derivatives - 63,000 -63,000


Reserve assets / Foreign exchange / Currency and deposits 40,000 - 40,000

Reserve assets / Foreign exchange / Financial Derivatives - 40,000 -40,000


Reserve assets / Foreign exchange / Currency and deposits - 24,000 -24,000

Reserve assets / Foreign exchange / Financial derivatives 24,000 - 24,000


Reserve assets / Foreign exchange / Currency and deposits - 45,000 -45,000

Reserve assets / Foreign exchange / Financial derivatives 45,000 - 45,000

51 Outflows are shown with a - sign; inflows with a + sign.52 At the end of each year, flows result from the difference between the index reference rate (Column (3)) and the agreed fixed rate (6.0%)

times the amount of the contract (USD 10,000,000), converted into euro using the average exchange rate EUR/USD.

Regarding the valuation of stocks (in order tofulfil both the International Investment Positionand the Template), additional information isprovided, i.e. 1) relevant market forwardinterest rates; 2) prevailing market discountinterest rates; and 3) the mid-point EUR/USDexchange rates at the end of each referenceperiod. The forward rates would be used toestimate the expected future stream ofpayments/receipts, calculated as the difference

between the market forward index rates and theagreed fixed rate. The discount rates would beapplied to obtain the present value of thatstream of payments/receipts at the relevantreference dates, accounting for the marked-to-market value of the financial derivative. The end-of-period exchange rates would be necessary toconvert the values into EUR (reportingcurrency) and to identify the exchange rateseparately from the interest rate (price) effect.


(1) Type of forward/spot value Market value Market value Market value Market value Market value

(market) index interest rate 31//12/99 31/12/00 31/12/01 31/12/02 31/12/03

Spot 5.8% 5.3% 5.5% 6.3% 6.5%1-year forward 5.2% 5.5% 6.2% 6.5%2-years forward 5.6% 6.0% 6.6%3-years forward 6.0% 6.5%4-years forward 6.4%

(2) Discount rates53 31/12/99 31/12/00 31/12/01 31/12/02

1-year ahead 5.5% 5.4% 5.85% 6.4%2-years ahead 5.4% 5.75% 6.4%3-years ahead 5.8% 6.25%4-years ahead 6.2%

(3) Date Mid-point foreign exchange rate EUR /$

31/12/98 0.931/12/99 0.931/12/00 1.031/12/01 0.831/12/02 0.931/12/03 0.9

Let us suppose the following stocks in theNCB�s balance sheet as at 31 12 1998:� Reserve assets / Foreign exchange /

Currency and deposits: USD 50,000,000(= EUR 45,000,000)

� Reserve assets / Foreign exchange /Financial derivatives: 0.

Regarding the reconciliation of positions andtransactions, it should be borne in mind that allpositions are treated throughout as assets witheither a negative or a positive sign, reflectingthe marked-to-market value of the swap.

53 In this example the rates of discount are derived from the market spot and forward rates. For the sake of simplicity, they are computedas the average between the relevant rates (either forward or spot) at the beginning and the end of each reference period, according tothe following formula:

f i� = (f (i-1)+f i)/2


The reconciliation between flows and stocks in the i.i.p. of the country of �A� would reflect thefollowing entries:

COUNTRY A (in EUR)

IIP Stock b.o.p. flows Price Exchange Other Stock31/12/98 changes rate changes adjustm. 31/12/9954, 55

Reserve assets / Foreign exchange /Currency and dep. 45,000,000 - - - - 45,000,000

Reserve assets / Foreign exchange /Fin. derivatives - - -71,808 - - -71,808

IIP Stock b.o.p. flows Price Exchange Other Stock31/12/99 changes rate changes adjustm. 31/12/00

Reserve assets / Foreign exchange /Currency and dep. 45,000,000 +63,000 - +4,993,000 - 49,930,000

Reserve assets / Foreign exchange /Fin. derivatives -71,808 -63,000 +17,770 -14,181 - -5,218

IIP Stock b.o.p. flows Price Exchange Other Stock 31/12/00 changes rate changes adjustm. 31/12/01

Reserve assets / Foreign exchange /Currency and dep. 49,930,000 +40,000 - -9,986,000 - 39,904,000

Reserve assets / Foreign exchange /Fin. derivatives -5,218 -40,000 +21,910 +1,044 - 57,735


Reserve assets / Foreign exchange /Currency and dep. 39,904,000 -24,000 - +4,991,000 - 44,919,000

Reserve assets / Foreign exchange /Fin. derivatives 57,735 +24,000 -216 +8,774 - 42,293


Reserve assets / Foreign exchange /Currency and dep. 44,919,000 -45,000 - - - 44,964,000

Reserve assets / Foreign exchange /Fin. derivatives 42,293 45,000 +2,707 - - -

54 The marked-to-market value of the swap would consist of the actual value of all future payments/receipts, using prevailing marketrates, according to the following formulae:

St = 10,000,000 * Et * {( f1 � 0.06) / (1+f1�) + (f2 � 0.06) / [(1+f1�)*(1+f2�)] + (f3 - 0.06) / [(1+f1�)*(1+f2�)*(1+f3�)] + �}

Where:St: marked-to-market value of the financial derivative on the last day of the periodEt = closing mid-point foreign exchange rate EUR/USD (corresponding to the last day of the period)fi: i-year forward market rate at time on tfi�: discount rate (expected prevailing market rate in the year t+i).

55 To illustrate how the formula is applied in the example, the first stock (December 1999) would be computed as follows:S1999 = 10,000,000 * 0.9 {(0.052 - 0.06) / (1+0.055) + (0.056 - 0.06) / [(1+0.055)*(1+0.054)] + (0.06 � 0.06) /[(1+0.055)*(1+0.054)*(1+0.058)] + (0.064 - 0.06) / [(1+0.055)*(1+0.054)*(1+0.058)*(1+0.062)] = - 71,808


The template, as reported by the country of NCB �A�, would reflect the following entries:



I.A.(5) Official reserve assets / Other Reserve assets / Financial deriv. -71,808

IV.(1).(e) Memo items / Financial derivative assets(net, marked-to-market) / Swaps -71,808



I.A.(5) Official reserve assets / Other Reserve assets / Financial deriv. -5,218

IV.(1).(e) Memo items / Financial derivative assets(net, marked to market) / Swaps -5,218



I.A.(5) Official reserve assets / Other Reserve assets / Financial deriv. +57,735

IV.(1).(e) Memo items / Financial derivative assets(net, marked to market) / Swaps +57,735



I.A.(5) Official reserve assets / Other Reserve assets / Financial deriv. +42,293

IV.(1).(e) Financial derivative assets (net, marked-to-market) / Swaps +42,293



56 In EUR.


IV.5 FRAs

On 30 November 1999 resident NCB �A�purchases a 3/6 FRA of USD 100,000,000 at 6%in the market of New York (i.e., commits itselfto pay 6% on a 6-month notional deposit ofUSD 100,000,000). The contract features mightbe summarised as follows (no margin callsrequired57):

� Date of agreement: 30 November 1999� Underlying notional instrument: six-

month deposit of US$ 100,000,000� Starting market rate for the forward

contract: 6%� Date of settlement: 28 February 2000

Other factors:� On 31 December 1999 the market rate

for this FRA decreases by 5.5% (i.e. apotential loss for �A� of USD 500,00058)

� On 31 January 2000 the market rate forthis FRA goes up by 6.5% (i.e. �A�potentially earns USD 500,000)

� At maturity, the six-month interest ratefor the USD is 6.8% and the transactionis settled: �A� receives a compensationof USD 800,000, transferred to itsaccount in a correspondent banksettled in the United States.


Date Monthly average Mid-pointexchange rate exchange rateEUR/USD EUR/USD

30/11/99 - 0.9631/12/99 - 0.9031/01/00 - 0.94

02/00 0.9428/02/00 - 0.95

Only at maturity the b.o.p. of country �A� would reflect a transaction:

COUNTRY A (in EUR)

Monthly b.o.p. 28 February 1999 Credit Debit Balance

Reserve assets / Foreign exchange / Currency and deposits 752,000 -752,000

Reserve assets / Foreign exchange / Financial derivatives 752,000 752,000


� Reserve assets / Foreign exchange /Currency and deposits:

57 If any, they should be treated as deposits and, if denominatedin foreign currency, they could be recorded under reserveassets.

58 The potential stream of future payments/receipts should bediscounted at the relevant rates. In this example, this fact isignored for the sake of simplicity.

USD 500,000,000(= EUR 480,000,000)

� Reserve assets / Foreign exchange /Financial derivatives: 0


The reconciliation between flows and stocks in the i.i.p. of country A would reflect the followingentries:

COUNTRY A (in EUR)


Reserve assets / Foreign exchange /Curr. and dep. 480,000,000 - - -30,000,000 - 450,000,000

Reserve assets / Foreign exchange /Fin. derivatives - - -450,000 - - -450,000


Reserve assets / Foreign exchange /Curr. and dep. 450,000,000 - - +20,000,000 - 470,000,000

Reserve assets / Foreign exchange /Fin. derivatives -450,000 - +940,000 -20,000 - +470,000


Reserve assets / Foreign exchange /Curr. and dep. 470,000,000 -752,000 - +5,008,000 - 475,760,000

Reserve assets / Foreign exchange /Fin. derivatives +470,000 +752,000 +285,000 -3,000 - -

In the template reported by country �A�, the entries corresponding to the captions involved in thisexample would be:





I.A.(5) Official reserve assets / Other reserve assets / Financial deriv. -450,000

IV.(1).(e) Memo items / Financial derivative assets(net, marked-to-market) / Forwards -450,000



I.A.(5) Official reserve assets / Other reserve assets / Financial deriv. +470,000

IV.(1).(e) Memo items / Financial derivative assets(net, marked-to-market) / Forwards +470,000



59 In EUR.


IV.6 Forward foreign exchangecontracts

A resident NCB �A� enters into a forward foreignexchange contract with J. P. Morgan New York tosell USD 100,000,000 at a price of EUR91,000,000 (no margin calls required60). Thecontract features might be summarised as follows:

� Date of the agreement: 10 December1999

� Market price of the forward contract:EUR 91,000,000

� Delivery date: 20 January 2000� Amount: USD 100,000,000

Other factors at play:� On 31 December 1999 the market

offers a 20-day forward foreign

In December the b.o.p. of country �A� wouldnot reflect any transaction. At maturity, twotransactions would be recorded: i) the sale offoreign currency, valued at market exchange

exchange contract to sellUSD 100,000,000 at EUR 93,000,000,according to certain expectations ofrecovery of the USD.

� At maturity, the exchange of currenciestakes place, by means of acorrespondent bank settled in USD.


Date Monthly average Mid-pointexchange rate exchange rateEUR/USD EUR/USD

30/11/99 - 0.9631/12/99 - 0.90

01/00 0.92 -31/01/00 - 0.94

60 If any, they should be treated as deposits and, if denominatedin foreign currency, they could be recorded under reserveassets.

rates; ii) the result of the derivative, valued asthe difference between the strike (agreed)foreign exchange rate and the prevailing marketrate:

COUNTRY A (in EUR)

Monthly b.o.p. 31 January 1999 Credit Debit Balance

Fin. acc. / Other inv. / Assets / Mon. auth. / Loans & deposits 91,000,000 -91,000,000


Reserve assets / Foreign exchange / Financial derivatives 1,000,000 -1,000,000


� Financial account / Other investment /Assets / Monetary authorities / Loans &deposits: EUR 500,000,000

� Reserve assets / Foreign exchange /Currency and deposits:USD 500,000,000 (= EUR 480,000,000)

� Reserve assets / Foreign exchange /Financial derivatives: 0

The reconciliation between flows and stocks inthe i.i.p. of country A would reflect thefollowing entries:


COUNTRY A (in EUR)


Fin. acc. / Other inv. / Assets /Mon. auth. / Loans & dep. 500,000,000 - - - - 500,000,000

Reserve assets / Foreign exchange /Fin. derivatives - - - -2,000,000 - -2,000,000

Reserve assets / Foreign exchange /Curr. and dep. 480,000,000 - - -30,000,000 - 450,000,000


Fin. acc. / Other inv. /Assets /Mon. aut. / Loans & dep. 500,000,000 -91,000,000 - - - 591,000,000

Reserve assets / Foreign exchange /Fin. derivatives -2,000,000 -1,000,000 - +1,000,000 - -

Reserve assets / Foreign exchange /Curr. and dep. 450,000,000 92,000,000 - +18,000,000 - 376,000,000

In the template reported by �A�, the entries corresponding to the captions involved in thisexample would be:





I.A.(5) Official reserve assets / Other Reserve assets / Financial deriv. -2,000,000

II.2.(a) Aggregate short and long positions in forwards and futures in foreigncurrencies vis-à-vis the domestic currency / Short positions (-) /Up to one month - 90,000,000

IV.(1).(e) Memo items / Financial derivative assets (net, marked to market) /Forwards -2,000,000



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