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14.5. From the gold standard era, when attention was focused on monetary gold, to the present day, when the focus has shifted to a range of reserve assets, it has been regarded as desirable that balance of payments statements should identify the components comprising transactions in reserve assets. The concept of reserve assets relates to those foreign financial assets that are effectively controlled by the monetary authorities and are available for use in meeting balance of payments needs. In Australia’s case, reserve assets include monetary gold, Special Drawing Rights, reserve position in the IMF, and foreign exchange (currency, deposits and debt securities) held by the Reserve Bank as part of Australia’s official reserve assets. Each of these components is described in box 11.3. The classification of these assets is shown in table 14.3.
14.6. Transactions in reserve assets are recorded at market value as they occur and are converted to Australian dollars at the market rate of exchange ruling at the time of the transaction (or a very close approximation).
14.7. Statistics for levels of reserve assets at the end of a period, for June 1976 onwards, are converted to Australian dollar equivalents at market prices and at market rates of exchange. For this purpose, the exchange rate used for amounts denominated in United States dollars is a representative mid-point determined by the Reserve Bank on the basis of market quotations at 4 pm on the last working day of the period to which the statistics relate. (Between June 1976 and June 1983, the rate used was the mid-point of the rates at which the Bank was prepared to deal with the Australian trading banks.) Rates used for other currencies are calculated by crossing the rate for the United States dollar with the mid-point of closing buying and selling rates for other currencies largely on Asian markets (the New York market was used between June 1976 and June 1983). The bases of valuation of reserves before June 1976 are described in box 14.4.
Treatment of gold loans
14.8. Gold loans made by the Reserve Bank provide the Bank with a gold loan claim (a secured commitment to repay the gold) on a resident or non-resident in exchange for its surrendering gold. Repayment of such loans results in a reduction of the claim and the acquisition of physical gold. Given the near substitute nature of such loans for physical gold, the Reserve Bank, consistent with the practice of other central banks, treats such loans as part of monetary gold in reserve assets. A brief discussion of this treatment is set out in box 14.5.