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Valuation of Assets and Liabilities in Financial Accounts

Valuation of Assets and Liabilities in Financial Accounts. 2006 WPFS Item 1 François Lequiller OECD secretariat. RECENT HOLDING GAINS/LOSSES. Recent period: very large movements in potential holding gains of households 2001-2006: Increase in housing prices

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Valuation of Assets and Liabilities in Financial Accounts

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  1. Valuation of Assets and Liabilities in Financial Accounts 2006 WPFS Item 1 François Lequiller OECD secretariat

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

  3. France: Households’ RevaluationsHousing…but also Financial assets

  4. France: Income and holding gains (changes in %)

  5. Holding gains are extracted from financial accounts

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

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

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

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

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