236 Government Finance Statistics Manual 2014
meet its liabilities. Consequently, the SDR allocations
and holdings on the balance sheet of that public sector
unit would no longer be identical; the SDR holdings
would be less than the allocations because they have
been exchanged. As a result, interest payable on the
SDR allocation of that public sector unit will be larger
than interest receivable on its SDR holdings. Interest
receivable on the SDR holdings exchanged will accrue
to the new holder. Th ese transactions in SDRs (and
resulting stock positions) are recorded at their gross
amounts.Currency and Deposits (3202, 3212, 3222, 3302, 3312, 3322)
9.33 Because the market price of domestic cur-
rency and deposits is fi xed in nominal terms, the net
acquisition of domestic currency and deposits is equal
to the stock held at the end of the reporting period
minus the stock held at the beginning of the period,
adjusted for any currency that was lost, stolen, or
destroyed. Calculation of the net acquisition of for-
eign currencies and deposits must exclude the eff ects
of changes in exchange rates, which are recorded as
holding gains or losses (as also mentioned in para-
graph 10.23).
9.34 Currency is treated as a liability of the unit
that issued the currency. Consequently, when a unit
puts new currency into circulation, a transaction is
recorded that increases its liability for currency. Usu-
ally, the counterpart to the increase in liabilities is
an increase in the unit’s fi nancial assets, most likely
deposits.^8 Transactions in gold and commemorative
coins that do not circulate as legal tender are treated
as transactions in inventories or valuables rather than
currency (see paragraph 7.135). Th e cost of producing
new currency is an expense transaction unrelated to
the value of transactions in currency.
9.35 Transactions in unallocated accounts for pre-
cious metals (including gold) are classifi ed under
deposits (as explained in paragraph 7.15), except for
transactions between two monetary authorities in
unallocated gold accounts for reserves purposes. If a
monetary authority acquires an unallocated gold ac-(^8) Seigniorage profi ts (i.e., the diff erence between the face value of
currency issued and its costs of production, including the costs
of base metals) for the issuer of currency are implicitly included
under currency and deposits and are not treated as revenue.
count from a nonmonetary authority, the transaction
is recorded as a transaction in currency and deposits
and then reclassifi ed as monetary gold (see paragraph
10.84).^9
Debt Securities (3203, 3213, 3223, 3303, 3313, 3323)
9.36 Most transactions in bonds and other types
of debt securities are covered by the general guide-
lines previously established. Th e accrual of interest on
certain debt securities may deserve special attention
and is summarized here (also see paragraphs 6.62–
6.83). Interest is the amount debtors will have to pay
their creditors over and above the repayment of the
amounts advanced by the creditors. Interest accrues
on a debt instrument for its entire life as determined
by the conditions set at inception of the instrument.
When payments are fi xed in advance, accrued interest
is determined using the original yield-to-maturity. A
single, eff ective yield—established at the time of the
security issuance—is used to calculate the amount of
accrued interest in each period to maturity. Th is ap-
proach is known as the “debtor approach.”
9.37 Most debt securities have a fi xed or variable in-
terest rate and may also be issued at a discount or, possi-
bly, a premium. In such cases, the interest receivable by
the holders of the debt securities has two components:- Th e amount of money income receivable from
coupon^10 payments each period, plus - Th e amount of interest accruing each period at-
tributable to the diff erence between the redemp-
tion price and the issue price.
9.38 On a cash basis, interest expense is recorded
at the time it is paid in cash, with a reduction in cur-
rency and deposits as the counterpart.
Debt securities issued at par
9.39 For debt securities for which the issue and
redemption prices are the same (i.e., issued at par),
total interest accrued over the whole life of the debt(^9) See also BPM6, paragraph 9.20.
(^10) A coupon payment is a contractually agreed cash amount paid
by the issuer of the debt security to the holder, at each coupon
date. It is calculated from the coupon rate, face value of the debt
security, and the number of payments per year, and may diff er
from the accrued interest if debt securities are issued at a discount
or a premium.