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Change in the Classification of Short-Term Gold Trading in the Balance of Payments Statistics

March 8, 2010
Ministry of Finance
Bank of Japan

The Ministry of Finance and the Bank of Japan have decided to change the classification of short-term gold trading in the Balance of Payments statistics. Such trading, which has been recorded under "other business services" in the services account, will be recorded under "other investment" (currency and deposits). In addition, the item "financial gold," which is currently a component of"other investment" (other assets), will be discontinued. These changes will be made from the preliminary data for the Balance of Payments for January, to be released today, and will also be reflected in the International Investment Position statistics from the data for the year-end 2009, to be released in May 2010. Details of the changes are as follows.

1. Present Classification

Net sales/purchases of short-term gold trading between residents and nonresidents have been recorded under "other business services" as part of merchanting services, in view of the fact that short-term gold trading deals with nonmonetary gold and that traders' positions resulting from such trading are supposed to be closed within a very short period.

Nonmonetary gold transactions associated with gold investment/savings accounts have been recorded under "other assets" (financial gold) in "other investment" as part of capital transactions.

2. New Classification

TheBalance of Payments and International Investment Position Manual, Sixth Edition (BPM6), which was published by the International Monetary Fund (IMF) in December 2008, recommends that gold transactions settled through unallocated gold accounts be classified as "other investment" (currency and deposits). This classification is based on the fact that unallocated gold accounts do not provide ownership of a specific piece of gold, but represent a claim against the account operator to deliver gold. A survey of reporters conducted by the Bank of Japan following the release of the BPM6 has determined that short-term gold trading is settled through unallocated gold accounts. In view of this finding, it has been decided that short-term gold trading will be recorded under "other investment" (currency and deposits) as a type of transaction involving financial assets.

Nonmonetary gold transactions associated with gold investment/savings accounts are considered to be of the same nature as short-term gold trading and will therefore be recorded under "other investment" (currency and deposits). In addition, the item "financial gold" will be discontinued.