15.77    Currency consists of notes and coins that are of fixed nominal values and are issued or authorised by the central bank or government. A distinction is drawn between domestic currency — which is the liability of resident units, such as the central bank and central government — and foreign currencies that are liabilities of non-resident units, such as foreign central banks, other banks and governments.

15.78    For Australia, the currency asset refers solely to domestic currency. There is little foreign currency in general circulation, and significant holdings are classified as foreign deposits.

15.79    Notes and coins are treated as liabilities at full face value. The cost of producing the physical notes and coins is recorded as government expenditure, and not netted against the receipts from issuing the currency.

15.80    In the currency market, all sectors and subsectors can hold currency as assets. In the ASNA, the RBA and the national general government sectors issue domestic currency, with the RBA issuing notes and the national general government issuing coins.

15.81    The table below outlines the data sources and methods used in the estimation of quarterly currency by sector in current prices. Real estimates are calculated for the national balance sheet.

15.82    The 2008 SNA does not provide a precise definition of a deposit. As a result, the distinction between deposits and loans in the ASNA is made by the convention that deposit liabilities can only be incurred by institutions included in RBA broad money, and therefore their asset counterpart is similarly restricted. Additionally, the conventions are adopted that all account balances (not evidenced by a security) between broad money institutions are classified as deposits or withdrawable share capital of building societies and that all domestic non-security borrowings by broad money institutions are classified as deposits are adopted. There are some classes of financial asset that may be described as deposits as a result of these conventions, such as account balances at State Treasuries, but which are classified as loans in the ASNA.

15.83    It follows from the convention above that deposit liabilities can only be incurred by institutions included in RBA broad money. The following financial institutions should therefore be classified as deposit taking in ASNA: the RBA; banks; credit unions; building societies; cash management trusts; and registered financial corporations. There have been minor changes to the definition of deposit-taking institution with the implementation of 2008 SNA in the ASNA. For example, cash management trusts are no longer included as deposit-takers. The units issued by cash management trusts were previously classified as deposits and are now classified as equity in money market investment funds.

15.84    In the ASNA, deposits are further classified into transferable deposits and other deposits.

15.85    Transferable deposits comprise all deposits that are exchangeable for banknotes and coins on demand — at par and without penalty or restriction — and are directly usable for making payments by cheque, draft, direct debit/credit, or another direct payment facility. A transferable deposit cannot have a negative value. For example, a bank current (or checking) account is normally treated as a transferable deposit but, if overdrawn, the withdrawal of funds to zero is treated as the withdrawal of a deposit, and the amount of the overdraft is treated as the granting of a loan.

15.86    Other deposits comprise all claims that are represented by evidence of deposit, other than transferable deposits. Typical forms of deposits that should be included are savings deposits (which are always non-transferable), fixed-term deposits and non-negotiable certificates of deposit. Deposits of limited transferability that are excluded from the category of transferable deposits are included here. Claims on the IMF that are components of international reserves, and not evidenced by loans, are recorded in other deposits. Repayable margin payments in cash related to derivative contracts are included in other deposits only when the counterparty is a broad money institution; otherwise, they are included as loans.

15.87    Deposits data in the ASNA is compiled for both 'Transferable Deposits' and 'Other Deposits'. Data sources defined below have available detailed information on the type of deposit accounts allowing a clear distinction between those of a short-term and long-term nature.

15.88    The ASNA does not make a distinction between deposits and loans for balances and transactions between ADIs. For practical reasons, all balances and transactions related to deposits and loans between such institutions are classified as deposits. Similarly, most liability account balances of ADIs which are not evidenced by a security are treated as deposits. This treatment is not extended to the rest of the world. The ABS Survey of International Investment provides clear direction for institutions to report their loans and deposits in the survey form.

15.89    The table below outlines the data sources and methods used in the estimation of quarterly deposits by sector in current prices. The estimates are derived at face value. Real estimates are calculated for the national balance sheet.

15.90    A debt security is a negotiable instrument that does not entitle the holder to participate in the residual value of the issuer on liquidation. Debt securities are divided into short-term and long-term securities using the original (rather than the remaining) term to maturity of the instruments.

15.91    Short-term debt securities are those with an original term to maturity of one year or less. For Australia, most short-term debt securities on issue are discount instruments (the issue value is lower than the face value, the difference representing interest payable) with an original term to maturity ranging from 30 to 180 days.

15.92    Issuers of promissory notes and bills of exchange may negotiate rollover facilities which allow them to use these instruments as sources of floating-rate long-term funds. In the ASNA, the existence of rollover facilities is not treated as converting what are legally short-term instruments into long-term instruments. The ASNA classifies the instrument according to the contracted term at the time of the original drawdown, rather than anticipating use of the rollover facility.

15.93    Apart from promissory notes, short-term securities are traded on well-established secondary markets. Treasury Notes are inscribed, but the other instruments in this category are bearer securities.

15.94    There are two types of short-term securities presented in the ASNA:

1. bills of exchange; and
2. one name paper.

15.95    The 2008 SNA uses the term ''bankers' acceptance'' to describe the instrument known in Australia as a bill of exchange. A bill of exchange is an unconditional order drawn (issued) by one party, sent to another party (usually a bank) for acceptance, and made out to, or to the order of, a third party, or to bearer (holder). It is a negotiable instrument with an original term to maturity of 180 days or less. Almost all bills are bank accepted or endorsed because investors expect bills to be the obligation of a first-class credit.

15.96    The bill of exchange represents an unconditional claim on the part of the holder and an unconditional liability on the part of the accepting bank; the bank's counterpart asset is a claim on its customer. As such the ASNA shows two instruments in order to demonstrate each side of this three-way transaction. Bills of exchange are treated as financial assets from the time of acceptance, even though funds may not be exchanged until a later stage.

15.97    Bills of exchange are used in international trade finance, liquidity management by banks, money market dealers and corporate treasuries. The data cover only those bills accepted by Australian residents.

15.98    By contrast with bills of exchange, one name paper is the liability of a single issuer and does not rely on the credit enhancement provided by acceptance. The ASNA data are further classified by ''domicility''; that is, the market into which the issue was made, being in Australia or offshore.

15.99    One name paper includes promissory notes, Treasury Notes and negotiable certificates of deposit issued by banks.

15.100    A promissory note — also called commercial paper — is a written promise to pay a specified sum of money to the bearer at an agreed date. It is usually issued for an original term between 30 and 180 days and is sold to an investor at a simple discount, to the value shown on the face of the document. A promissory note is not accepted by a bank and, unlike a bill of exchange, is not endorsed by the parties which sell it in the market.

15.101    Treasury Notes are inscribed instruments issued by the Commonwealth Government, and have an original maturity of five, thirteen or twenty-six weeks.

15.102    Bank certificates of deposit are similar to promissory notes except that the drawer is a bank rather than (say) an industrial company. Bank-issued certificates of deposit with an original term to maturity of one year or less are called negotiable certificates of deposit.

15.103    The tables below outline the data sources and methods used in the estimation of quarterly short-term debt securities in current prices. The estimates are valued at market prices. Real estimates are calculated for the national balance sheet.

15.104    Long-term debt securities include those securities that have an original maturity of more than one year. Each consists of a document that represents the issuer's pledge to pay the holder the sum of money shown on the face of the document, on a date which at the time of issue is more than one year in the future. Many bonds on issue in Australia pay interest at a set percentage of face value every six months (known as ''coupon interest'') for the life of the bond. Such bonds are known as fixed interest bonds. There is a significant amount of variable rate bonds, and some deep discount (or zero coupon) bonds on issue.

15.105    Long-term debt securities are frequently borrowed by market makers to cover short positions. Where identified, stock loans of this nature are treated in the ASNA as securities' trades. Repurchase agreements, which are also used to cover short positions, are treated as purchases and sales of debt securities.

15.106    Asset-backed securities are arrangements under which payments of interest and principal are backed by payments on specified assets or income streams. They may be issued by a specific holding unit or vehicle, for the purpose of raising funds in order to pay the originator for the underlying assets. Asset-backed securities are classified as debt securities because the security issuers have a requirement to make payments, while the holders do not have a residual claim on the underlying assets. They are backed by various types of financial assets; for example, mortgages and credit card loans.

15.107    Non-participating preferred stocks or shares are those that pay a fixed income but do not provide for participation in the distribution of the residual value of an incorporated enterprise on dissolution. These shares are classified as debt securities. Bonds that are convertible into equity are classified in this category prior to the time that they are converted.

15.108    Long-term debt securities issued in Australia include:

• Treasury bonds issued by the Commonwealth Government;
• Various series of inscribed stock which are issued by the central borrowing authorities and other government-owned corporations. These are known as semi-government securities;
• Debentures, transferable certificates of deposit, and unsecured notes, which are collectively called corporate securities or medium-term notes;
• Asset-backed bonds including mortgage-backed bonds;
• Covered bonds, issued by authorised deposit taking institutions;
• Kangaroo bonds, which are foreign bonds issued in the Australian market,
• Convertible notes prior to conversion; and
• Renewable energy certificates (RECs) issued by the Commonwealth Government.

15.109    The data are further classified by 'domicility'; that is, the market into which the issue was made, being in Australia (onshore) or offshore.

15.110    The table below outlines the data sources and methods used in the estimation of quarterly long-term debt securities, i.e. bonds in current prices. The estimates are valued at market prices. Real estimates are calculated for the national balance sheet.

15.111    Derivatives are financial instruments that are linked to a specific financial instrument or commodity, through which specific financial risks can be traded in financial markets in their own right. Examples include swaps; forward contracts; futures contracts; and options. In the ASNA, derivatives are treated as debt securities irrespective of the nature of the underlying asset. The value of a derivative derives from the price of the underlying item: the reference price. This price may relate to a commodity; a financial asset; an interest rate; an exchange rate; another derivative; or a spread between two prices.

15.112    An employee stock option is an agreement made on a given date (the ''grant'' date). An employee may purchase a given number of shares of the employer's stock at a stated price (the ''strike'' price) either at a stated time (the ''vesting'' date) or within a period of time (the ''exercise'' period) immediately following the vesting date. Transactions in these options are recorded in the financial account as the counterpart to the element of compensation of employees represented by the value of the stock option. The ASNA does not record employee stock options separately, due to unavailability of source data.

15.113    Margins are payments of cash or collateral that cover actual or potential obligations under derivatives, especially futures contracts or exchange-traded options. Repayable margins consist of deposits or other collateral deposited to protect a counterparty against default risk, but which remain under the ownership of the unit placing the margins. Although its use may be restricted, a deposit is classified as repayable if the depositor retains the risks and rewards of ownership.

15.114    Repayable margin payments in cash are transactions in deposits, not transactions in a derivative. The depositor has a claim on the exchange or other institution holding the deposit. In the ASNA, margins on derivatives are recorded as loans rather than deposits.

15.115    The table below outlines the data sources and methods used in the estimation of quarterly derivatives in current prices. Real estimates are calculated for the national balance sheet.

15.116    Loans are borrowings which are not evidenced by the issue of debt securities. They are not usually traded, and their value does not decline even in a period of rising interest rates. Examples are an overdraft from a bank; money lent by a building society with a mortgage over a property as collateral; and a financial lease agreement with a finance company. Repurchase agreements between deposit-taking institutions are treated as purchases and sales of debt securities, not collateralised loans. Undrawn lines of credit are not recognised as loans because the liabilities are contingent.

15.117    Placements are customers' account balances with entities not regarded as deposit-taking institutions. Examples are account balances of State and local public non-financial corporations with their central borrowing authorities; balances of public-sector pension funds with their State Treasuries; and 11am money placed with corporate treasuries.

15.118    The values of loans to be recorded in the balance sheets of both creditors and debtors are the amounts of the market value of the principal and interest outstanding. This amount includes any interest that has been earned but not been paid. It should also include any amount of indirectly measured service charge (the difference between bank interest and SNA interest) due on the loan that has accrued and not been paid. Accrued interest is shown under accounts receivable or payable. The value of a loan does not reflect the consequences of any interest payments due after the date of the balance sheet, even if these were specified in the original loan agreement. In practice, loans are valued at nominal value less specific loan loss provisions.

15.119    Loans may be divided, on a supplementary basis, between short- and long-term loans. Short-term loans comprise loans that have an original maturity of one year or less. Loans repayable on the demand of the creditor should be classified as short-term even when these loans are expected to be outstanding for more than one year. In the ASNA, they include credit cards and other forms of revolving credit, as well as some placements between state governments and their respective central borrowing authorities.

15.120    Long-term loans comprise loans that have an original maturity of more than one year. This category includes residential mortgages.

15.121    As recommended by the 2008 SNA, the ASNA splits the loans market between short-term and long-term loans and placements. Broadly speaking, this is defined according to original term to maturity. Unlike those for deposits, short and long-term splits for loans are not available directly from most data sources (except banks, building societies, credit unions and registered financial corporations where the forms on APRA’s EFS Statement of Financial Position provide detailed splits for households between short and long-term loans).

15.122    The ASNA makes the assumption that the majority of loans for the non-household sector are of a long-term nature, and an approximate ratio of 80:20 is implemented to dissect data between long-term and short-term maturities.

15.123    The table below outlines the data sources and methods used in the estimation of quarterly loans and placements by sector in current prices. They are valued at market prices. Volume/real estimates are calculated for the national balance sheet.

15.124    Equity has the distinguishing feature that the holders of equity own a residual claim on the assets of the institutional unit issuing the equity. It represents the owner's funds in the institutional unit. In contrast to debt, equity does not generally provide the owner with a right to a predetermined amount, or an amount determined according to a fixed formula. Equity is treated as a liability of the issuing institutional unit (e.g. a corporation or other unit). Ownership of equity in legal entities is usually evidenced by shares, stocks or investment fund units.

15.125    Equities are sub-divided into listed shares and unlisted shares; both types of shares are negotiable and are classified as equity securities.

15.126    The 2008 SNA also recommends that equity other than shares be presented separately. The ASNA has not followed this recommendation because of the data requirements and workloads associated with this recommendation. The 2008 SNA 'Other equity' is combined with shares data in the financial accounts. In practice, this means units in investment funds are treated as shares.

15.127    Listed shares are equity securities listed on an exchange. They are also referred to as quoted shares. The existence of quoted prices of shares listed on an exchange means that current market prices are usually readily available. In the ASNA, statistics for listed shares are restricted to those equities listed on the Australian Securities Exchanges (ASX). Data sources cannot support classification of foreign shares to listed or unlisted categories.

15.128    Unlisted shares are equity securities not listed on an exchange. They can also be called private equity; venture capital usually takes this form. Unlisted shares tend to be issued by direct foreign investment subsidiaries and smaller scale businesses. They typically have different regulatory requirements but neither qualification is necessarily the case.

15.129    For unlisted shares, there may be no observable market prices for positions in equity not listed on a stock exchange. This situation often arises for direct investment enterprises; private equity; equity in unlisted and delisted companies; listed but liquid companies; joint ventures; and unincorporated enterprises. An estimate is required when actual market values are unavailable, such as estimating own funds at net asset value of an enterprise.

15.130    The tables below outline the data sources and methods used in the estimation of quarterly listed and unlisted shares and other equity in current prices. The estimates for listed shares are valued at market prices. Volume/real estimates are calculated for the national balance sheet.

15.131    Net equity in reserves represents policy-holders' claims on life insurance businesses and pension funds. These technical reserves are calculated by deducting all repayable liabilities from the value of total assets. It comprises the following:

• Household claims on technical reserves of life insurance corporations and pension funds: this category represents households' net equity in, or claims on, the reserves of life insurance corporations and pension funds. In the case of life insurance corporations, it equates in large measure with the net policy liabilities of life offices to households. In the case of pension funds, it represents the funds' obligations to members including any surpluses and reserves. A claim by householders on insurance technical reserve of non-resident pension funds is also included in the ASNA.
• Pension fund claims on life insurance corporations reserves: This category represents pension funds' net equity in, or claims on, life insurance corporation reserves. A significant number of pension funds invest their members' contributions in the statutory funds of life insurance corporations. These investments are typically held as unit-linked insurance or investment policies.

15.132    The table below outlines the data sources and methods used in the estimation of quarterly net equity in reserves in current prices. Volume/real estimates are calculated for the national balance sheet.

15.133    Unfunded superannuation claims represent the liabilities of the general government sector to public sector employees in respect of unfunded retirement benefits. In Australia, most governments operate, or used to operate, superannuation schemes for their employees that are unfunded or only partly funded. Some government unfunded superannuation schemes have one component funded through direct employee contributions, and another (the employers' contributions) which is unfunded. Other government unfunded superannuation schemes comprise only an unfunded employer component.

15.134    Direct data sources are used to compile unfunded public sector superannuation claims. The outstanding liability in relation to unfunded superannuation claims is recorded as a liability in the general government sectors and as an asset in the pension fund and household sector.

15.135    The main data on National General Government by counterparties are obtained from balance sheet information from Commonwealth Government Ledgers from the Department of Finance and APRA Statement of Financial Position - Superannuation. The main data on State and Local General Government by counterparties are obtained from Government Finance Statistics. Unfunded superannuation claims have been recognised in government accounts since jurisdictions moved to accrual accounting. Prior to the change in accounting methods, the ABS developed a set of historical estimates for outstanding liabilities and changes in liabilities for national accounting purposes.

15.136    Transactions are derived as the difference in the balance sheet positions. When annual balance sheet positions are revised due to annual actuarial assessments, an estimate is derived for the actuarial adjustments and recorded as other volume changes and price changes.

15.137    Prepayments of premiums and reserves against outstanding claims represents policy-holders’ net equity in, or claims on, the reserves of general insurance corporations. They equate to prepayments of premiums and reserves held to cover outstanding claims.

15.138    They consist of premiums paid but not yet earned (called unearned premiums) and claims due but not yet settled, including cases where the amount is in dispute or the event leading to the claim has not yet been reported (called claims outstanding).

15.139    The table below outlines the data sources and methods used in the estimation of quarterly prepayments of premiums and reserves against outstanding claims in current prices. Volume/real estimates are calculated for the national balance sheet.

15.140    This category comprises trade credit for goods and services extended to corporations, government, NPISHs, households and the rest of the world, and advances for work that is in progress (if classified as such under inventories), or is to be undertaken. Trade credits and advances do not include loans to finance trade credit, which are classified as loans.

15.141    The ASNA does not separate the two categories of accounts payable/receivable into short-term and long-term.

15.142    The table below outlines the data sources and methods used in the estimation of quarterly accounts receivable and accounts payable by sector in current prices. The estimates are derived at face value. Volume/real estimates are calculated for the national balance sheet.

15.143    Annual financial accounts and balance sheets are not compiled separately in the ASNA. Annual estimates published in the ASNA for financial accounts are the sum of four quarters, and the annual stock estimates are the quarterly estimates as at 30 June.