About changes in the method of statistical accounting for interrelated operations under repurchase agreements (repos) conducted by the Bank of Russia

The External and Public Relations Department of the Bank of Russia informs about changes in the method of statistical accounting for interrelated operations under repurchase agreements (repos) conducted by the Bank of Russia, further to the Information Notice dated October 26, 2009 and due to implementation of the 6th edition of the IMF’s Balance of Payments and International Investment Position Manual (BPM6). The changes do not apply to the accounting for repos and reverse repos which are not interrelated.

Part of repos is characterized by the provision of securities by the Bank of Russia to nonresidents under repos in exchange for other securities received from them under reverse repos with equivalent cash exchange (interrelated repos). Although such deals are closed in the form of two separate transactions, in essence, they are a type of securities lending.

Under the previous approach to accounting for interrelated repos, such transactions have been recorded separately both regarding cash and securities transfers. Repos, in terms of cash movements, involved an increase in balances on corresponding accounts of the Bank of Russia and growth of its foreign liabilities; at the same time, securities transferred to nonresidents were subject to reclassification from reserve to nonreserve assets. Reverse repos led to regrouping in the assets of the Bank of Russia, i.e. lower corresponding account balances were accompanied by equivalent increase of loans in the form of reverse repos. Securities received from nonresidents under reverse repos were not recognized in the accounts.

In accordance with BPM6, securities lending should not be recorded in international accounts. Accordingly, the Bank of Russia shall not

• reclassify part of securities transferred to nonresidents under repos from reserve to nonreserve assets;

• record corresponding liabilities of the Bank of Russia to nonresidents under repos and claims on nonresidents under reverse repos.

Upgrading of the approaches to reverse transactions accounting will stipulate a number of changes in the balance of payments both pertaining to reserve assets and nonreserve assets and liabilities. In the analytical presentation of the balance of payments, unlike the neutral one, the financial account balance will be adjusted. In the international investment position, the positions of nonreserve assets and liabilities will be changed, and no entries shall be reported under other changes in assets and liabilities. Exclusion of liabilities arising from interrelated repos will also affect the volume of external debt of the monetary authorities.

The volume of international reserves of the Russian Federation as of the reporting dates shall remain unchanged; adjustments shall be limited to the composition of reserve assets by instrument.

Tables below provide comparison between data compiled under the former and the new methodologies.

The reference to the Press Service is mandatory if you intend to use this material.

31.12.2009 00.00.00