the services for which the intermediaries do not charge explicitly.

6.125. The total value of FISIM is measured in the System as the total
property income receivable by financial intermediaries minus their total
interest payable, excluding the value of any property income receivable
from the investment of their own funds, as such income does not arise
from financial intermediation. Whenever the production of output is
recorded in the System the use of that output must be explicitly
accounted for elsewhere in the System. Hence, FISIM must be recorded as
being disposed of in one or more of the following ways--as intermediate
consumption by enterprises, as final consumption by households, or as
exports to non-residents.

6.126. In principle, the total output should, therefore, be allocated
among the various recipients or users of the services for which no
explicit charges are made. In practice, however, it may be difficult
to find a method of allocating the total output among different users
in a way which is conceptually satisfactory from an economic viewpoint
and for which the requisite data are also available. Some flexibility
has therefore to be accepted in the way in which the output is allocated.
Some countries may prefer to continue to use the convention proposed
in the 1968 version of the SNA whereby the whole of the output is recorded
as the intermediate consumption of a nominal industry. This convention
makes total GDP for the economy as a whole invariant to the size of the
estimated output.

6.127. when the output is allocated among different users, one possible
way of proceeding is to base the allocation on the difference between
the actual rates of interest payable and receivable and a "reference" rate
of interest. When the requisite information is available, estimates of
the following may be calculated and used to allocate the total output.
(a) For those to whom the intermediaries lend funds, both resident and
non-resident, the difference between the interest actually charged on loans,
etc. and the amount that would be paid if a reference rate were used.
(b) For those from whom the intermediaries borrow funds, both resident and
non-resident, the difference between the interest they would receive if
a reference rate were used and the interest they actually receive.
6.128. The reference rate to be used represents the pure cost of borrowing
funds--that is, a rate from which the risk premium has been eliminated
to the greatest extent possible and which does not include any intermediation
services. The type of rate chosen as the reference rate may differ from
country to country but the inter-bank lending rate could be a suitable
choice when available; alternatively, the central bank lending rate could
be used.

6.129. if this type of information is not available or not appropriate,
the total value of FISIM could be allocated using different indicators.
For example, it could be allocated in proportion to the total financial
assets and liabilities that exist between financial intermediaries and
various groups of users, or in proportion to other relevant financial

6.130. For the System as a whole, the allocation of FISIM among different
categories of users is equivalent to reclassifying certain parts of interest
payments as payments for cervices. This reclassification has important
consequences for the values of' certain aggregate flows of goods and
services--output, intermediate and final consumption, imports and exports--
which affect the values added of particular industries and sectors, and also
total gross domestic product (GDP). There are also implications for the flows
of interest recorded in the primary distribution of income accounts. However,
the saving of all the units concerned, including the financial intermediaries
themselves, are not affected. Nor is the financial account affected.

6.131. Because of these effects, it is desirable for compilers to provide
additional information to give some indication to users of the accounts of the
consequences of alternative treatments. when FISIM is actually allocated among
users, the resulting values should be identified and shown separately. Conversely,
when the whole of the value of FISIM is, by convention, allocated to the
intermediate consumption of a nominal industry, it is recommended that compilers
should provide supplementary estimates, even if only approximate and very
aggregative, of the allocation of FISIM between intermediate consumption and
the main categories of final demand and of the effects that such an allocation
would have on GDP, GNI and other relevant aggregates. The treatment of FISIM is
explained in greater detail in annex III on this subject at the end of this

Central banks
6.132. The services of financial intermediation provided by central banks
should be measured in the same way as those of other financial intermediaries.
Because of the unique functions which may be performed by central banks, the value
of their output may sometimes appear exceptionally large in relation to the
resources employed. Services other than financial intermediation which may be
carried out by central banks should be valued by the fees or commissions charged,
in the same way, as for other financial enterprise.

Unincorporated financial intermediaries and money lenders

6.133. The output of unincorporated financial intermediaries, including those
whose activities are not monitored and subject to regulation by central banks
or other authorities, is measured in the same way as for financial corporations.
Money lenders who incur liabilities on their own account in order to mobilize
funds which they lend to others are clearly engaged in financial intermediation.
Their output must be measured by the difference between the property income they
receive from the lending of borrowed funds and the interest paid on the borrowed
funds. As in the case of large corporations, the income they receive from the
investment of their own funds is excluded from this calculation.

6.134. Some money lenders lend only their own funds. The activity of such small-scale
money lenders, including many village money lenders, is not financial intermediation
as they do not channel funds from one group of institutional units to another.
Lending as such is not a process of production and the interest received from the
lending of own funds cannot be identified with the value of any services produced.