46 Government Finance Statistics Manual 2014
legal and economic owners are diff erent, the reference
should generally be understood to be to the economic
owner. Appendix 4 discusses a number of cases where
legal and economic ownership are diff erent.3.40 Sometimes government may claim legal own-
ership of a resource on behalf of the community at
large, such as territorial waters. If so, the benefi ts also
accrue to the government on behalf of the commu-
nity at large. Th us, government is both the legal and
economic owner of these resources. However, govern-
ments may share the benefi ts with other entities but,
by virtue of accepting the majority of the risks, be-
come the economic owner of a resource. For example,
in the case of public-private partnerships, economic
ownership can be vested with government when gov-
ernment accepts the majority of the risks (see para-
graphs A4.58–A4.65).
3.41 Th e benefi ts inherent in fi nancial assets and
liabilities are seldom transferred from a legal owner
to an economic owner in exactly the same state. Th ey
are usually transformed to new forms of fi nancial as-
sets and liabilities by the intermediation of a fi nancial
institution that assumes some of the risk and benefi ts
while passing the fi nancial instrument on to other
units.Defi nition of Assets and Liabilities.
3.42 An asset is a store of value representing a
benefi t or series of benefi ts accruing to the economic
owner by holding or using the resource over a period
of time. It is a means of carrying forward value from
one reporting period to another.
3.43 Only economic assets are recorded in the
macroeconomic statistical systems (i.e., included
within the asset boundary) and they appear in the bal-
ance sheet of the unit that is the economic owner of
the asset. Economic assets are resources over which
ownership rights are enforced and from which eco-
nomic benefi ts may fl ow to the owners. Personal attri-
butes such as reputation or skill, which are sometimes
described as an asset, are not recognized as such in
GFS because they are not economic assets as defi ned
earlier. A distinction is made between nonfi nancial
and fi nancial assets. All fi nancial assets have liabili-
ties as counterparts, except for gold bullion held as a
reserve asset, which, by convention, is a fi nancial asset
(7.128).Financial assets and liabilities
3.44 A particularly important mechanism in the
economy is the device whereby one economic unit
exchanges a particular set of benefi ts with another
economic unit for future payments. From this a fi nan-
cial claim, and hence a liability, can be defi ned. Th ere
are no nonfi nancial liabilities recognized in the GFS
framework, and thus the term liability necessarily re-
fers to a liability that is fi nancial in nature.^11
3.45 A liability is established when one unit (the
debtor) is obliged, under specifi c circumstances, to
provide funds or other resources to another unit (the
creditor). Normally, a liability is established through
a legally binding contract that specifi es the terms and
conditions of the payment(s) to be made and payment
according to the contract is unconditional. Th ese are
typically established through the provision of eco-
nomic value by one institutional unit, the creditor,
to another, the debtor, normally under a contractual
arrangement. Liabilities can also be created by the
force of law, and by events that require future trans-
fer payments. In many cases, liabilities (and their cor-
responding fi nancial claims) are explicitly identifi ed
by formal documents expressing the debtor-creditor
relationship. In other cases, liabilities are imputed to
refl ect the underlying economic reality of a transac-
tion, such as the creation of a notional loan when an
asset is acquired under a fi nancial lease.
3.46 Liabilities created by the force of law include
those arising from taxes, penalties (including penal-
ties arising from commercial contracts), and judicial
awards at the time they are imposed. Liabilities estab-
lished by events that require future transfer payments
include claims on nonlife insurance companies,
claims for damages not involving nonlife insurance
companies, and claims arising from winnings from
lottery and gambling activities.
3.47 Whenever a liability exists, the creditor has a
corresponding fi nancial claim on the debtor. A fi nan-
cial claim is an asset that typically entitles the owner
of the asset (the creditor) to receive funds or other re-
sources from another unit, under the terms of a liabil-
ity. Like liabilities, fi nancial claims are unconditional.
A fi nancial claim provides benefi ts to the creditor,
such as by acting as a store of value, or by generating(^11) In contrast, accounting standards recognize nonfi nancial liabili-
ties under certain conditions.