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1. CALCULATION OF FISIM OUTPUT BY SECTOR S122 AND S123 (a) Statistical data required For each of the sub-sectors S122 and S123 (), it is necessary to use the table of average stocks of loans, deposits (split by user sectors) and the securities other than shares issued by FI for the period (average of four quarters) and the accrued interest, after reallocation of interest rate subsidies to their actual recipients as defined by the 1995 ESA.

(b) The choice of a reference rate In the balance sheets of financial intermediaries included in S122 and S123 loans and deposits with resident units have to be broken down to differentiate between loans and deposits:

— which are interbank (i.e. within the institutional units included in sectors S122 and S123);

— which are undertaken with the user institutional sectors (S11 — S124 — S125 — S13 — S14 — S15) (except with the central banks). In addition to that, loans and deposits with the rest of the world (S2) should also be broken down into loans and deposits with non-resident financial intermediaries and loans and deposits within other non-residents.

If the institutional characteristics of the national banking systems do not allow to calculate this rate (e.g. because banks do not issue securities other than shares), then an alternative reference rate should be used. This rate can be calculated by using the stocks and interest flows of assets (excluding loans)/liabilities (excluding deposits) whose average time to maturity is the nearest to that of the liabilities in the balance sheets of FIs included in S122 and S123. Method 3 To obtain the FISIM output of resident FIs by institutional sector, two reference rates can be applied, one for short term transactions (calculated as in Method 1) and one for long term transactions (using published rates for securities other than shares whose maturity reproduces that of the liabilities in the balance sheet with a long maturity). Method 4 To obtain the FISIM output of the resident FIs by institutional sector, the ‘internal’ reference rate is calculated according to the three alternatives below:

(a) as an average of lending and deposits rates which are undertaken with the resident institutional sectors (S124 — S125 — S11 — S13 — S14 — S15) (except with the central banks);

(b) as an average between the average of lending and deposits rates which are undertaken with the resident user institutional sectors (S124 — S125 — S11 — S13 — S14 — S15) (except with the central banks) and the implicit interest rate calculated as in Method 1;

(c) as an average between the average of lending and deposits rates which are undertaken with the resident user institutional sectors (S124 — S125 — S11 — S13 — S14 — S15) (except with the central banks) and the implicit interest rate calculated as in Method 2. To determine FISIM imports and exports, the reference rate used is the average interbank rate weighted by the levels of stocks in the headings ‘loans between S122 and S123 on the one hand, and non-resident FIs on the other hand’ and ‘deposits between S122 and S123 on the one hand, and non-resident FIs on the other hand’, which are included in the balance sheet of the financial intermediaries. This calculated rate is the ‘external’ reference rate which is used to calculate FISIM exports and imports.

In the trial period the calculation should be done distinguishing the internal and external reference rates both on the basis of the residence of the FIs engaged in the transactions and on the basis of the currencies in which these transactions are denominated. Member States are required to provide Eurostat with all the statistical information used in the methodology applied.

(c) Detailed breakdown of FISIM by institutional sector For each institutional sector it is necessary to have the following table of loans and deposits granted by the resident FIs: The total FISIM by institutional sector is obtained as the sum of FISIM on loans granted to the institutional sector and of FISIM on deposits of the institutional sector. FISIM on the loans granted to the institutional sector = interest receivable on loans − (loan stocks × ‘internal’ reference rate) FISIM on the deposits of the institutional sector = (deposit stocks × ‘internal’ reference rate) − interest payable on deposits Part of the output is exported; on the basis of the balance sheet of the financial intermediaries (S122 and S123) we observe: stocks interest receivable stocks interest payable Loans to non-residents

deposits of non-residents Exported FISIM is calculated using the ‘external’ interbank reference rate as follows: FISIM on loans granted to non-residents (including FIs) = interest receivable − (loan stock × ‘external’ reference rate) FISIM on the deposits of non-residents (including FIs) = (deposit stocks × ‘external’ reference rate) − interest payable (d) Breakdown into intermediate and final consumption of FISIM allocated to households The services attributable to households must be broken down into:

— intermediate consumption of households in their capacity as owners of dwellings,

— intermediate consumption of households in their capacity as owners of unincorporated enterprises,

— final consumption of households. It entails a breakdown of loans to households (stocks and interest) into:

— dwelling loans,

— loans to households as owners of unincorporated enterprises,

— other loans to households.

Loans to households as owners of unincorporated enterprises and dwelling loans are generally shown separately in the various breakdowns of lending in financial and monetary statistics. Other loans to households can be obtained by subtraction. FISIM for loans to households should be distributed among three items (dwelling loans, loans to households as owners of unincorporated enterprises and other loans to households) on the basis of information on stocks and interest for each of the three groups. Dwelling loans are not identical to mortgage loans, as mortgage loans can have other purposes. Household deposits must be broken down into:

— deposits of households as owners of unincorporated enterprises,

— deposits of individuals. In the absence of statistics on deposits of households as owners of unincorporated enterprises in the trial period of five years Member States are required to compare the results on the allocation of FISIM by using the following two methods: Method 1 Stocks can be calculated on the basis of the ratio of deposits to value added observed for the smallest size corporations and extrapolated for unincorporated enterprises. Method 2

Stocks can be calculated on the basis of the ratio of deposits to turnover observed for the smallest size corporations and extrapolated for unincorporated enterprises. FISIM on the deposits of households must be distributed between FISIM on the deposits of households as owners of unincorporated enterprises and that on the deposits of households as consumers on the basis of the average stocks of these two categories, for which, owing to lack of further information, the same interest rate may be used. As an alternative, especially in the case more detailed information on loans and deposits of households is absent, FISIM to households can be allocated to intermediate consumption and final consumption assuring that all loans are attributable to households as producer or as owners of dwellings and that all deposits are attributable to households as consumers.

2. CALCULATION OF IMPORTED FINANCIAL INTERMEDIATION Non-resident FIs grant loans to residents and receive deposits from residents. By institutional sector it is necessary to have the following table: stocks interest receivable by non-resident FIs stocks interest payable by non-resident FIs Loans granted by non-resident FIs

Deposits with non-resident FIs The financial intermediation imported by each institutional sector is therefore calculated as follows: FISIM imported for loans = interest receivable by non-resident FIs − (loan stocks × ‘external’ reference rate) FISIM imported for deposits = (deposit stocks × ‘external’ reference rate) − interest payable by non-resident FIs 3. FISIM AT CONSTANT PRICES The difference between the reference rate and the effective rate of interest represents the margin earned by the financial intermediary, and thus can be considered to be the price paid for the service provided. FISIM at constant prices are derived as the quotient of the value of FISIM on loans and deposits held by S122 and S123 and this price. The stocks of loans and deposits are revalued to base period prices using a general price index (e.g. the implicit price deflator for domestic final demand). Base period margin on loans = effective interest rate on loans − reference rate Base period margin on deposits = reference rate − effective interest rate on deposits () OJ C 124, 21.

4. 1997, p.

28. () OJ C 339, 10.

11. 1997.

() Opinion delivered on 16 October 1997 (not yet published in the Official Journal). () OJ L 310, 30.

11. 1996, p.

1. () OJ L 181, 28.

6. 1989, p.

47. () OJ L 59, 6.

3. 1991, p.

19. Decision as amended by Decision 96/174/EC (OJ L 51, 1.

3. 1996, p. 48). () Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission (OJ L 184, 17.7.1999, p. 23). () The financial intermediaries to be considered are the sectors S122 (other monetary financial institutions) and S123 (other financial intermediaries, except insurance corporations and pension funds), except investment funds.

In the trial period of five years Member States are required to compare the results on the allocation of FISIM by using the internal reference rate calculated according to the following four methods: Method 1 To obtain the FISIM output of the resident FIs by institutional sector, the ‘internal’ reference rate is calculated as the ratio of interest receivable on loans between S122 and S123 to stocks of loans between S122 and S123. Method 2 To obtain the FISIM output of the resident FIs by institutional sector, the ‘internal’ reference rate is calculated as the weighted average of the rates on both interbank loans and on securities other than shares issued by FIs. The weights are the level of stocks in the headings loans between resident FIs included in S122 and S123 and securities other than shares issued by the resident financial intermediairies included in S122 and S123.