Government Finance Statistics Manual 2014

338 Government Finance Statistics Manual 2014

still exist, keeping some specifi c activities not directly

linked to monetary policy.^12

A5.33 However, the core characteristic of a mon-

etary union is that the monetary policy is exclusively

conducted at the union level. Th ere is a single set of

intervention rates, and the national central banks (or

branches) may in no way autonomously adjust the

monetary policy to national conditions. Th ey may,

however, perform some specifi c tasks in the imple-

mentation process of the monetary policy, such as

the management of collaterals that may be required

for access to central bank liquidity and the delivery of

banknotes in the diff erent economies.^13

A5.34 If a monetary union replaces national cur-

rencies with a common currency, they form a currency

union. For statistical purposes, a currency union is de-

fi ned as a union to which two or more economies be-

long and that has a regional central decision-making

body, commonly a currency union central bank, en-

dowed with the legal authority to conduct a single mon-

etary policy and issue the single currency of the union.

A5.35 Monetary and currency unions do not raise

specifi c issues for GFS, even in cases where a single,

common central bank is a substitute for a domestic

central bank in the context of the relationships be-

tween central bank and government. Th e currency

union central bank is an institutional unit in its own

right, owning assets and incurring liabilities, and is

nonresident of any currency union member econ-

omy but resident in the currency union (see para-

graph  2.21). Distributions of profi ts of such regional

central banks should be classifi ed as income on the

fi nancial asset to which member economies’ subscrip-

tions are attributed.

Using the GFSM Statistical Framework under Regional Arrangements.

A5.36 Participation in regional economic arrange-

ments may require some cooperation and coordina-

tion of fi scal policies. However, it is only in the context

of monetary unions where such cooperation and co-

ordination are generally viewed as an indispensable

element for ensuring its optimal functioning.

(^12) Th is arrangement is applied in the case of the European
Monetary Union with the “Euro system” made up of the national
central banks of the EU member states.
(^13) See the BPM6, Appendix 3.
A5.37 In a monetary union, there is one single
monetary policy that interacts with fi scal policies pri-
marily carried out at the national level of each mem-
ber country. At the same time, fi scal conditions may
impact monetary policies.
A5.38 Th erefore, to conduct proper monetary pol-
icies, monitor macroeconomic imbalances in member
economies, and consolidate accounts for the union,
fi scal statistics should be compiled in a consistent
manner for all members of the union. Consistency
in compiling fi scal data will allow the accurate mea-
surement of diff erences in aggregates such as the tax
burden, the share of government expense to GDP, the
respective weight of diff erent types of taxes in the total
tax burden, the composition of expense, the imple-
mentation of budgetary rules, etc.
A5.39 Where coordinated fi scal policies are agreed
in a union, the scope of such fi scal cooperation/
coordination has consequences for the statistical re-
porting framework. Fiscal targets may be defi ned and
monitored at the union level. Examples of such key
variables are the level of gross/net debt, operating bal-
ance, net lending/net borrowing, or, in the case of the
cash basis of recording, the cash surplus/defi cit. Quan-
titative targets (or “reference values”) may be set at
the union level, and these targets may be expressed as
nominal amounts or ratios to gross domestic product.^14
A5.40 Coordinated fi scal policies may also call for
more disaggregated data. For instance, the calculation
of primary balances requires that data on interest in-
come and expense are available. Similarly, eliminating
the infl uence of the business cycle on the level of reve-
nue and expenditure by calculating the structural bal-
ance may require additional information (see annex
to Chapter 4). In addition, measuring the outcome of
specifi c economic objectives may require data on very
detailed types of expenses, such as those related to so-
cial development goals or the government employee
wage bill. Th e statistical framework for a union should
be designed with a suffi cient degree of detail, and
should be applied by all members in a fully consistent
manner, in order to capture the relevant information
(^14) In the case of the West African Economic and Monetary
Union (WAEMU), these quantitative targets, called “convergence
criteria,” are important for the multilateral surveillance exercised
by the WAEMU Commission to ensure the convergence of the
economic performance and policies of the member countries.