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 : Increase in housing prices : 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’ Revaluations Housing…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