Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community

• 2.72. | | | | --- | --- | | Definition: | The State government subsector consists of state governments which are separate institutional units exercising some of the functions of government at a level below that of central government and above that of the governmental institutional units existing at local level, except for the administration of social security funds. |

Included in subsector S.1312 are those non-profit institutions which are controlled and mainly financed by state governments and whose competence is restricted to the economic territories of the States.

Subsector: Local government (S.1313)

• 2.73. | | | | --- | --- | | Definition: | The subsector local government includes those types of public administration whose competence extends to only a local part of the economic territory, apart from local agencies of social security funds. |

Included in subsector S.1313 are those non-profit institutions which are controlled and mainly financed by local governments and whose competence is restricted to the economic territories of the local governments.

Subsector: Social security funds (S.1314)

• 2.74. | | | | --- | --- | | Definition: | The subsector social security funds includes all central, State and local institutional units whose principal activity is to provide social benefits and which fulfil each of the following two criteria: (a) by law or by regulation certain groups of the population are obliged to participate in the scheme or to pay contributions; (b) general government is responsible for the management of the institution in respect of the settlement or approval of the contributions and benefits independently from its role as supervisory body or employer (see paragraph 4.89). |

There is usually no direct link between the amount of the contribution paid by an individual and the risk to which that individual is exposed.

HOUSEHOLDS (S.14)

• 2.75. | | | | --- | --- | | Definition: | The households sector (S.14) covers individuals or groups of individuals as consumers and possibly also as entrepreneurs producing market goods and non-financial and financial services (market producers) provided that, in the latter case, the corresponding activities are not those of separate entities treated as quasi-corporations. It also includes individuals or groups of individuals as producers of goods and non-financial services for exclusively own final use (see paragraphs 3.20, 3.25 and 3.30). Households as consumers may be defined as small groups of persons who share the same living accommodation, who pool some, or all, of their income and wealth and who consume certain types of goods and services collectively, mainly housing and food. The criteria of the existence of family or emotional ties may be added. The principal resources of these units are derived from the compensation of employees, property income, transfers from other sectors or the receipts from disposal of market products or the imputed receipts from output of products for own final consumption. |

• 2.76. The households sector includes:

• (a) individuals or groups of individuals whose principal function is consumption;

• (b) persons living permanently in institutions who have little or no autonomy of action or decision in economic matters (e.g. members of religious orders living in monasteries, long-term patients in hospitals, prisoners serving long sentences, old persons living permanently in retirement homes). Such people are treated as comprising, together, a single institutional unit, that is, a single household;

• (c) individuals or groups of individuals whose principal function is consumption and that produce goods and non-financial services for exclusively own final use; only two categories of services produced for own final consumption are included within the system: services of owner-occupied dwellings and domestic services produced by paid employees;

• (d) sole proprietorships and partnerships without independent legal status — other than those treated as quasi-corporations — which are market producers;

• (e) non-profit institutions serving households, which do not have independent legal status or those which do but are of only minor importance (see paragraph 2.88).

• 2.77. The households sector is subdivided into six subsectors:

• (a) employers (including own-account workers) (S.141 + S.142);

• (b) employees (S.143);

• (c) recipients of property incomes (S.1441);

• (d) recipients of pensions (S.1442);

• (e) recipients of other transfer incomes (S.1443);

• (f) others (S.145).

• 2.78. Households are allocated to subsectors according to the largest income category (employers' income, compensation of employees, etc.) of the household as a whole. When more than one income of a given category is received within the same household, the classification must be based on the total household income within each category.

Subsector: Employers (including own-account workers) (S.141 + S.142)

• 2.79. | | | | --- | --- | | Definition: | The subsector employers (including own-account workers) consists of the group of households for which the (mixed) incomes (B.3) accruing to the owners of household unincorporated enterprises from their activity as producers of market goods and services with or without paid employees are the largest source of income for the household as a whole, even if it does not always account for more than a half of total household income. |

Subsector: Employees (S.143)

• 2.80. | | | | --- | --- | | Definition: | The subsector employees consists of the group of households for which the income accruing from compensation of employees (D.1) is the largest source of income for the household as a whole. |

Subsector: Recipients of property incomes (S.1441)

• 2.81. | | | | --- | --- | | Definition: | The subsector recipients of property incomes consists of the group of households for which property income (D.4) is the largest source of income for the household as a whole. |

Subsector: Recipients of pensions (S.1442)

• 2.82. | | | | --- | --- | | Definition: | The subsector recipients of pensions consists of the group of households for which the income accruing from pensions is the largest source of income for the household as a whole. |

Pension households are households whose largest income consists of retirement or other pensions, including pensions from previous employers.

Subsector: Recipients of other transfer incomes (S.1443)

• 2.83. | | | | --- | --- | | Definition: | The subsector recipients of other transfer incomes consists of the group of households for which the income accruing from other current transfers is the largest source of income for the household as a whole. |

Other current transfers are all current transfers other than property income, pensions and income of persons living permanently in institutions.

Subsector: Others (S.145)

• 2.84. | | | | --- | --- | | Definition: | The subsector others consists of persons living permanently in institutions. |

Persons living permanently in institutions are classified separately because the criterion of the largest source of income does not allow a meaningful classification of these persons in one of the foregoing subsectors.

• 2.85. If the main income source of the household as a whole is not available for sectoring purposes, the income of the reference person constitutes the second-best characteristic to be used for classifying purposes. The reference person of a household is normally the person with the largest income. If the latter information is not available, the income of the person who states the he/she is the reference person may be used for subsectoring households.

• 2.86. However, other criteria may be appropriate and needed for different kinds of analysis or as the basis for policy-making, e.g. breakdown of households as entrepreneurs by activity: agricultural households; non-agricultural households (industry; services).

NON-PROFIT INSTITUTIONS SERVING HOUSEHOLDS (S.15)

• 2.87. Definition : The sector non-profit institutions serving households (NPISHs) (S.15) consists of non-profit institutions which are separate legal entities, which serve households and which are private other non-market producers (see paragraph 3.32). Their principal resources, apart from those derived from occasional sales, are derived from voluntary contributions in cash or in kind from households in their capacity as consumers, from payments made by general governments ([^E0044]) and from property income.

• 2.88. Where these institutions are not very important, they are not included in this sector, their transactions being mixed up with those of households (S.14).

The NPISHs sector includes the following main kinds of NPISHs that provide non-market goods and services to households:

• (a) trade unions, professional or learned societies, consumers' associations, political parties, churches or religious societies (including those financed but not controlled by governments), and social, cultural, recreational and sports clubs;

• (b) charities, relief and aid organizations financed by voluntary transfers in cash or in kind from other institutional units.

Sector S.15 includes charities, relief or aid agencies serving non-resident units and excludes entities where membership gives right to a predetermined set of goods and services.

REST OF THE WORLD (S.2)

• 2.89. Definition : The rest of the world (S.2) is a grouping of units without any characteristic functions and resources; it consists of non-resident units ([^E0045]) insofar as they are engaged in transactions with resident institutional units, or have other economic links with resident units. Its accounts provide an overall view of the economic relationships linking the national economy with the rest of the world.

• 2.90. The rest of the world is not a sector for which complete sets of accounts have to be kept, although it is often convenient to describe the rest of the world as if it were a sector. Sectors are obtained by disaggregating the total economy to obtain more homogeneous groups of resident institutional units, which are similar in respect to their economic behaviour, their objectives and functions. This is not the case for the sector rest of the world: there are recorded the transactions and other flows of non-financial and financial corporations, non-profit institutions, households and general government with non-resident institutional units and other economic relationships between residents and non-residents, e.g. claims by residents on non-residents.

• 2.91. It should be noted that the rule whereby the accounts for the rest of the world include only transactions carried out between resident institutional units and non-resident units is subject to the following exceptions:

• (a) the services of transport (up to the border of the exporting country) provided by resident units in respect of imported goods are shown in the rest of the world accounts with fob imports, even though they are produced by resident units (see paragraph 3.144);

• (b) transactions in foreign assets between residents belonging to different sectors are shown in the detailed financial accounts for the rest of the world; although they do not affect the country's financial position vis-à-vis the rest of the world, they affect the financial relationships of individual sectors with the rest of the world;

• (c) transactions in the country's liabilities between non-residents belonging to different geographical zones are shown in the geographical breakdown of the rest of the world accounts. Although these transactions do not affect the country's overall liability to the rest of the world, they affect its liabilities to different parts of the world.

• 2.92. The sector rest of the world (S.2) is subdivided into:

• (a) the European Union (S.21):
• 1. the member countries of the European Union (S.211);
• 1. the institutions of the European Union (S.212);

• (b) third countries and international organizations (S.22).

SECTOR CLASSIFICATION OF PRODUCER UNITS FOR MAIN STANDARD LEGAL FORMS OF OWNERSHIP

• 2.93. The following overview and paragraphs 2.94 to 2.101 summarize the principles underlying the classification of producer units into sectors, using the standard terminology for describing the main types of institutions.

• 2.94. Private and public corporations which are market producers are classified as follows:

• (a) those principally engaged in the production of goods and non-financial services: in sector S.11, non-financial corporations (see paragraph 2.23.a);

• (b) those principally engaged in financial intermediation and auxiliary financial activities: in sector S.12, financial corporations (see paragraphs 2.40. a and 2.40. f).

• 2.95. Cooperatives and partnerships recognized as independent legal entities and which are market producers are classified as follows:

• (a) those principally engaged in the production of goods and non-financial services: in sector S.11, non-financial corporations (see paragraph 2.23. b);

• (b) those principally engaged in financial intermediation and auxiliary financial activities: in sector S.12, financial corporations (see paragraph 2.40. b).

Table 2.3. — Sector classification of producer units for main standard legal forms of ownership

Type of producer Standard legal description	Type of producer Standard legal description	Market producers principally engaged in the production of goods and non-financial services	Market producers principally engaged in financial intermediation	Other non-market producers	Other non-market producers
Type of producer Standard legal description	Type of producer Standard legal description	Market producers principally engaged in the production of goods and non-financial services	Market producers principally engaged in financial intermediation	Public producers (see paragraph 3.28)	Private producers (see paragraph 3.29)
Private and public corporations	Private and public corporations	S.11 non-financial corporations (see paragraph 2.23. a)	S.12 financial corporations (see paragraph 2.40. a and f)
Cooperatives and partnerships recognized as independent legal entities	Cooperatives and partnerships recognized as independent legal entities	S.11 non-financial corporations (see paragraph 2.23. b)	S.12 financial corporations (see paragraph 2.40. b)
Public producers which by virtue of special legislation are recognized as independent legal entities	Public producers which by virtue of special legislation are recognized as independent legal entities	S.11 non-financial corporations (see paragraph 2.23. c)	S.12 financial corporations (see paragraph 2.40. c)
Public producers not recognized as independent legal entities	those with the characteristics of quasi-corporations	S.11 non-financial corporations (see paragraph 2.23. f)	S.12 financial corporations (see paragraph 2.40. g)
Public producers not recognized as independent legal entities	the rest			S.13 general government (see paragraph 2.69. a)
Non-profit institutions recognized as independent legal entities	Non-profit institutions recognized as independent legal entities	S.11 non-financial corporations (see paragraph 2.23. d)	S.12 financial corporations (see paragraph 2.40. d)	S.13 general government (see paragraph 2.69. b)	S.15 non-profit institutions serving households [^E0046] (see paragraph 2.87)
Partnerships not recognized as independent legal entities Sole proprietorships	those with the characteristics of quasi-corporations	S.11 non-financial corporations (see paragraph 2.23. f)	S.12 financial corporations (see paragraph 2.40. g)
Partnerships not recognized as independent legal entities Sole proprietorships	the rest	S.14 households (see paragraph 2.75)	S.14 households (see paragraph 2.75)
Holding corporations whose preponderant type of activity of the group of corporations controlled by them is the production of	goods and non-financial services	S.11 non-financial corporations (see 2.23. e)
Holding corporations whose preponderant type of activity of the group of corporations controlled by them is the production of	financial services		S.12 financial corporations (see paragraph 2.40. e)

With the exception of non-profit institutions of minor importance (see paragraph 2.88).

• 2.96. Public producers which by virtue of special legislation are recognized as independent legal entities and which are market producers are classified as follows:

• (a) those principally engaged in the production of goods and non-financial services: in sector S.11, non-financial corporations (see paragraph 2.23. c);

• (b) those principally engaged in financial intermediation and auxiliary financial activities: in sector S.12, financial corporations (see paragraph 2.40. c).

• 2.97. Public producers not recognized as independent legal entities and which are market producers are classified as follows:

• (a) if they are quasi-corporations (see paragraph 2.13. f):
• 1. those principally engaged in the production of goods and non-financial services: in sector S.11, non-financial corporations (see paragraph 2.23. f);
• 1. those principally engaged in financial intermediation and financial auxiliary activities: in sector S.12, financial corporations (see paragraph 2.40. g).

• (b) If they are not quasi-corporations: in sector S.13, general government, as they remain an integral part of the units which control them (see paragraph 2.69. a).

• 2.98. Non-profit institutions (associations, foundations) recognized as independent legal entities are classified as follows:

• (a) those which are market producers and principally engaged in the production of goods and non-financial services: in sector S.11, non-financial corporations (see paragraph 2.23. d);

• (b) those principally engaged in financial intermediation and auxiliary financial activities: in sector S.12, financial corporations (see paragraph 2.40. d);

• (c) those which are non-market producers:
• 1. in sector S.13, general government, if they are public producers controlled and mainly financed by general government (see paragraph 2.69. b);
• 1. in sector S.15, non-profit institutions serving households, if they are private producers (see paragraph 2.87).

• 2.99. Sole proprietorships and partnerships not recognized as independent legal entities and which are market producers are classified as follows:

• (a) if they are quasi-corporations (see paragraph 2.13. f):
• 1. those principally engaged in the production of goods and non-financial services: in sector S.11, non-financial corporations (see paragraph 2.23. f);
• 1. those principally engaged in financial intermediation and financial auxiliary activities in sector S.12 financial corporations (see paragraph 2.40. g).

• (b) If they are not quasi-corporations, they are classified in sector S.14, households (see paragraph 2.75).

• 2.100. Holding corporations (i.e. corporations which direct a group of companies) are classified as follows:

• (a) in sector S.11, non-financial corporations, if the preponderant type of activity of the group of corporations which are market producers, as a whole is the production of goods and non-financial services (see paragraph 2.23. e);

• (b) in sector S.12, financial corporations, if the preponderant type of activity of the group of corporations as a whole is financial intermediation (see paragraph 2.40. e).

• 2.101. Table 2.3 illustrates in schematic form the various cases which are enumerated above.

LOCAL KIND-OF-ACTIVITY UNITS AND INDUSTRIES

• 2.102. In practice, most institutional units producing goods and services are engaged in a combination of activities at the same time. They may be engaged in a principal activity, some secondary activites and some ancillary activities (see paragraphs 3.10 to 3.13).

• 2.103. An activity can be said to take place when resources such as equipment, labour, manufacturing techniques, information networks or products are combined, leading to the creation of specific goods or services. An activity is characterized by an input of products (goods and services), a production process and an output of products.

Activities can be determined by reference to a specific level of  NACE Rev. 2 ([^E0047]).

• 2.104. If a unit carries out more than one activity, all the activites which are not ancillary activities are ranked according to the gross value added. On the basis of the preponderant gross value added generated, a distinction can then be made between principal activity and secondary activities. Ancillary activities are not isolated to form distinct entities or separated from the principal or secondary activities of entities they serve.

• 2.105. In order to analyse flows occurring in the process of production and in the use of goods and services, it is necessary to choose units which emphasize relationships of a technico-economic kind. This requirement means that as a rule institutional units must be partitioned into smaller and more homogeneous units with regard to the kind of production. Local kind-of-activity units are intended to meet this requirement as a first but practice-oriented operational approach.

THE LOCAL KIND-OF-ACTIVITY UNIT

• 2.106. Definition : The local kind-of-activity unit (local KAU) is the part of a KAU which corresponds to a local unit ([^E0048]). The KAU groups all the parts of an institutional unit in its capacity as producer contributing to the performance of an activity at class level (four digits) of the  NACE Rev. 2 and corresponds to one or more operational subdivisions of the institutional unit. The institutional unit's information system must be capable of indicating or calculating for each local KAU at least the value of production, intermediate consumption, compensation of employees, the operating surplus and employment and gross fixed capital formation

The local unit is an institutional unit producing goods and services or a part thereof situated in a geographically identified place.

A local KAU may correspond to an institutional unit as producer or a part thereof; on the other hand, it can never belong to two different institutional units.

• 2.107. If an institutional unit producing goods and services contains a principal activity and also one or several secondary activities, it should be subdivided into the same number of KAUs, and the secondary activities should be classified under different headings from the principal activity. On the other hand, the ancillary activities are not separated from the principal or secondary activities. But KAUs falling within a particular heading of the classification system can produce products outside the homogeneous group on account of secondary activities connected with them which cannot be separately identified from available accounting documents. Thus a KAU may carry out one or more secondary activities.

THE INDUSTRY

• 2.108. | | | | --- | --- | | Definition: | An industry consists of a group of local KAUs engaged in the same, or similar, kind-of-activity. At the most detailed level of classification, an industry consists of all the local KAUs falling within a single class (four digits) of  NACE Rev. 2 and which are therefore engaged in the same activity as defined in the  NACE Rev. 2. |

Industries comprise both local KAUs producing market goods and services and local KAUs producing non-market goods and services. An industry by definition consists of a group of local KAUs engaged in the same type of productive activity, irrespective of whether or not the institutional units to which they belong produce market or non-market output.

• 2.109. Industries may be classified in three categories:

• (a) industries producing market goods and services (market industries) and goods and services for own final use ([^E0049]);

• (b) industries producing non-market goods and services of general government: non-market industries of general government;

• (c) industries producing non-market goods and services of non-profit institutions serving households: non-market industries of non-profit institutions serving households.

CLASSIFICATION OF INDUSTRIES

• 2.110. The classification used for grouping local KAUs into industries is the  NACE Rev. 2.

UNITS OF HOMOGENEOUS PRODUCTION AND HOMOGENEOUS BRANCHES

• 2.111. The local KAU meets the requirements of production process analysis only approximately (see paragraphs 2.105 and 2.107). The unit which is optimal for this kind of analysis, i.e. input-output analysis, is the unit of homogeneous production.

THE UNIT OF HOMOGENEOUS PRODUCTION

• 2.112. | | | | --- | --- | | Definition: | The distinguishing feature of a unit of homogeneous production is a unique activity which is identified by its inputs, a particular process of production and its outputs. The products which constitute the inputs and outputs are themselves distinguished not only by their physical characteristics and the extent to which they are processed but also by the technique of production used: they can be identified by reference to a classification of products (see paragraph 2.118). |

• 2.113. If a goods and services producing institutional unit carries out a principal activity and also one or more secondary activities, it will be partitioned into the same number of units of homogeneous production. Ancillary activities are not separated from the principal or secondary activities. Just like the local KAU, the unit of homogeneous production may correspond to an institutional unit or a part thereof; on the other hand, it can never belong to two different institutional units.

THE HOMOGENEOUS BRANCH

• 2.114. | | | | --- | --- | | Definition: | The homogeneous branch consists of a grouping of units of homogeneous production. The set of activities covered by a homogeneous branch is identified by reference to a product classification. The homogeneous branch produces those goods or services specified in the classification and only those products. |

• 2.115. Homogeneous branches are units designed for economic analysis. Units of homogeneous production cannot usually be observed directly; data collected from the units used in statistical enquiries have to be rearranged to. form homogeneous branches.

• 2.116. Homogeneous branches may be classified in three categories:

• (a) homogeneous branches producing market goods and services (market branches) and goods and services for own final use ([^E0050]);

• (b) homogeneous branches producing non-market goods and services of general government: non-market branches of general government;

• (c) homogeneous branches producing non-market goods and services of non-profit institutions serving households: non-market branches of non-profit institutions serving households.

• 2.117. The homogeneous branches producing market goods and services and goods and services for own final use consist of all units of homogeneous production of whatever institutional sector which are exclusively engaged in the production of market goods and services or of goods and services for own final use. The production of market goods and services within the general government or non-profit institutions sectors (including those intended for themselves) are treated as units of homogeneous production and classified in an appropriate market branch.

The non-market homogeneous branches of general government producing non-market goods and services consist of all units of homogeneous production in the general government sector which produce non-market goods and services.

The non-market homogeneous branches of non-profit institutions serving households consist of all units of homogeneous production in the non-profit institutions serving households sector which produce non-market goods and services.

THE CLASSIFICATION OF HOMOGENEOUS BRANCHES

• 2.118. The classification of homogeneous branches used in the input-output tables is based on the Classification of Products by Activity (CPA) ([^E0051]). The CPA is a product classification whose elements are structured according to the industrial origin criterion, industrial origin being defined by  NACE Rev. 2.

CHAPTER 3

TRANSACTIONS IN PRODUCTS

• 3.01. | | | | --- | --- | | Definition: | Products are all goods and services that are created within the production boundary. The latter is defined in paragraph 3.07. |

• 3.02. The following main categories of transactions in products are distinguished in the ESA:

Transaction categories	Code
Output	P.1
Intermediante consumption	P.2
Final consumption expenditure	P.3
Actual final consumption	P.4
Gross capital formation	P.5
Exports of goods and services	P.6
Imports of goods and services	P.7

• 3.03. Transactions in products are recorded in the following accounts:

• (a) in the goods and services account, output and imports are recorded as resources and the other transactions in products are registered as uses;

• (b) in the production account, output is recorded as a resource and intermediate consumption is recorded as a use;

• (c) in the use of disposable income account, final consumption expenditure is recorded as a use;

• (d) in the use of adjusted disposable income account, actual final consumption is recorded as a use;

• (e) in the capital account, gross capital formation is registered as a use (a change in assets);

• (f) in the external account of goods and services, imports of goods and services are recorded as a resource, while exports of goods and services are registered as uses.

• 3.04. In the supply table, output and imports are recorded as supplies. In the use table, intermediate consumption, gross capital formation, final consumption expenditure and exports are registered as uses. In the symmetric input-output table, output and imports are recorded as supplies and the other transactions in products as uses.

• 3.05. Supplies of products are valued at basic prices (see paragraph 3.48). Uses of products are valued at purchasers' prices (see paragraph 3.06). For some types of supplies and uses, more specific valuation principles are used, e.g. for imports and exports of goods.

• 3.06. | | | | --- | --- | | Definition: | At the time of purchase, the purchaser's price is the price the purchaser actually pays for the products; including any taxes less subsidies on the products (but excluding deductible taxes like VAT on the products); including any transport charges paid separately by the purchaser to take delivery at the required time and place; after deductions for any discounts for bulk or off-peak-purchases from standard prices or charges; excluding interest or services charges added under credit arrangements; excluding any extra charges incurred as a result of failing to pay within the period stated at the time the purchases were made. |

If the time of use does not coincide with the time of purchase, adjustments should be made in such a way to take account of the changes in price due to the lapsing of time (in a manner symmetrical with changes in the prices of the inventories). Such modifications are especially important if the prices of the products involved change drastically within a year.

PRODUCTION AND OUTPUT

• 3.07. | | | | --- | --- | | Definition: | Production is an activity carried out under the control and responsibility of an institutional unit that uses inputs of labour, capital and goods and services to produce goods and services. Production does not cover purely natural processes without any human involvement or direction, like the unmanaged growth of fish stocks in international waters (but fish farming is production). |

• 3.08. Production includes:

• (a) the production of all individual or collective goods or services that are supplied to units other than their producers (or intended to be so supplied);

• (b) the own-account production of all goods that are retained by their producers for their own final consumption or gross fixed capital formation. Own account production for gross fixed capital formation includes the production of fixed assets such as construction, the development of software and mineral exploration for own gross fixed capital formation (for the concept of gross fixed capital formation, see paragraphs 3.100 to 3.127). Own-account production of goods by households pertains in general to:
• 1. own-account construction of dwellings;
• 1. the production and storage of agricultural products;
• 1. the processing of agricultural products, like the production of flour by milling, the preservation of fruit by drying and bottling; the production of dairy products like butter and cheese and the production of beer, wine and spirits;
• 1. the production of other primary products, like mining salt, cutting peat and carrying water;
• 1. other kinds of processing, like weaving cloth, the production of pottery and making furniture. Own-account production of a good by households should be recorded if this type of production is significant, i.e. if it is believed to be quantitatively important in relation to the total supply of that good in a country. By convention, in the ESA, only own-account construction of dwellings and the production, storage and processing of agricultural products is included; all other own-account production of goods by households are deemed to be insignificant for European Union countries;

• (c) the own-account production of housing services by owner-occupiers;

• (d) domestic and personal services produced by employing paid domestic staff;

• (e) volunteer activities that result in goods, e.g. the construction of a dwelling, church or other building are to be recorded as production. Volunteer activities that do not result in goods, e.g. caretaking and cleaning without payment, are excluded.

All such activities are included even if they are illegal or not-registered with tax, social security, statistical and other public authorities.

• 3.09. Production excludes the production of domestic and personal services that are produced and consumed within the same household (with the exception of employing paid domestic staff and the services of owner-occupied dwellings). Cases in point are:

• (a) cleaning, decoration and maintenance of the dwelling as far as these activities are also common for tenants;

• (b) cleaning, servicing and repair of household durables;

• (c) preparation and serving of meals;

• (d) care, training and instruction of children;

• (e) care of sick, infirm or old people;

• (f) transportation of members of the household or their goods.

PRINCIPAL, SECONDARY AND ANCILLARY ACTIVITIES

• 3.10. | | | | --- | --- | | Definition: | The principal activity of a local KAU is the activitiy whose value added exceeds that of any other activity carried out within the same unit. The classification of the principal activity is determined by reference to  NACE Rev. 2, first at the highest level of the classification and then at more detailed levels. |

• 3.11. | | | | --- | --- | | Definition: | A secondary activity is an activity carried out within a single local KAU in addition to the principal activity. The output of the secondary activity is a secondary product. |

• 3.12. | | | | --- | --- | | Definition: | The output of an ancillary activity is not intended for use outside the enterprise. An ancillary activity is a supporting activity undertaken within an enterprise in order to create the conditions within which the principal or secondary activities of local KAUs can be carried out. Ancillary activities typically produce outputs that are commonly found as inputs into almost any kind of productive activity, small as well as large. |

Ancillary activities may be, e.g. purchasing, sales, marketing, accounting, data processing, transportation, storage, maintenance, cleaning and security services. Enterprises may have a choice between engaging in ancillary activities or purchasing such services on the market from specialist service producers.

Own-account capital formation is not considered to be an ancillary activity.

• 3.13. Ancillary activities are treated as integral parts of the principal or secondary activities with which they are associated. As a result:

• (a) the output of an ancillary activity is not explicitly recognized and recorded separately. It follows that the use of this output is also not recorded;

• (b) all the inputs consumed by an ancillary activity — materials, labour, consumption of fixed capital, etc. are treated as inputs into the principal or secondary activity which it supports.

OUTPUT (P.1)

• 3.14. | | | | --- | --- | | Definition: | Output consists of the products created during the accounting period. |

Particular cases included are:

• (a) the goods and services which one local KAU provides to a different local KAU belonging to the same institutional unit;

• (b) the goods which are produced by a local KAU and remain in inventories at the end of the period in which they are produced, whatever their subsequent use.

However, goods or services produced and consumed within the same accounting period and within the same local KAU are not separately identified. They are therefore not recorded as part of the output or intermediate consumption of that local KAU.

• 3.15. When an institutional unit contains more than one local KAU, the output of the institutional unit is the sum of the outputs of its component local KAUs, including outputs delivered between the component local KAUs.

• 3.16. Three types of output are distinguished in the ESA:

• (a) market output (P.11);

• (b) output produced for own final use (P.12);

• (c) other non-market output (P.13).

This distinction is also applied to local KAUs and institutional units:

• (a) market producers;

• (b) producers for own final use;

• (c) other non-market producers.

The distinction, between market, for own final use and other non-market is fundamental, because it determines the valuation principles to be applied to output: market output, output produced for own final use and total output of market producers and producers for own final use are valued at basic prices, while the total output of other non-market producers (local KAUs) is valued from the costs side. The total output of an institutional unit is valued as the sum of the total outputs of its local KAUs and depends thus also on the distinction between market, for own final use and other non-market (see paragraphs 3.54 to 3.56). Furthermore, the distinction is also used to classify institutional units by sector (see paragraphs 3.27 to 3.37).

The distinctions are defined in a top-down way, i.e. the distinction is first defined for institutional units, then for local KAUs and then for their output. As a consequence, the exact meaning of the distinction on the product level (i.e. the definition of the concepts of market output, output for own final use and other non-market output) can only be understood by looking also at features of the institutional unit and the local KAU that produce that output.

After the general definitions of the three types of output and of the three types of producers (see paragraphs 3.17 to 3.26), the distinction between market, for own final use and other non-market is presented in a top-down way.

• 3.17. | | | | --- | --- | | Definition: | Market output consists of output that is disposed of on the market (see paragraph 3.18) or intended to be disposed of on the market. |

• 3.18. Market output includes:

• (a) products sold at economically significant prices;

• (b) products bartered;

• (c) products used for payments in kind (including compensation of employees in kind and mixed income in kind);

• (d) products supplied by one local KAU to another within the same institutional unit to be used as intermediate inputs or for final uses;

• (e) products added to the inventories of finished goods and work-in-progress intended for one or other of the above uses (including natural growth of animal and vegetable products and uncompleted structures for which the buyer is unknown).

• 3.19. | | | | --- | --- | | Definition: | In the ESA, the economically significant price of a product is defined partly in relation to the institutional unit and local KAU that has produced the output (see paragraphs 3.27 to 3.40). For example, by convention all the output of unincorporated enterprises owned by households sold to other institutional units is sold at economically significant prices, i.e. is to be regarded as market output. For the output of some other institutional units, output is only sold at economically significant prices when more than 50 % of the production costs is covered by sales. |

• 3.20. | | | | --- | --- | | Definition: | Output produced for own final use consists of goods or services that are retained either for final consumption by the same institutional unit or for gross fixed capital formation by the same institutional unit. |

• 3.21. Products retained for own final consumption can only be produced by the household sector. Typical examples are:

• (a) agricultural products retained by farmers;

• (b) housing services produced by owner-occupiers;

• (c) household services produced by employing paid staff.

• 3.22. Products used for own gross fixed capital formation can be produced by any sector. Examples are:

• (a) special machine tools produced by engineering enterprises;

• (b) dwellings, or extensions to dwellings, produced by households;

• (c) own-account construction, including communal construction undertaken by groups of households.

• 3.23. | | | | --- | --- | | Definition: | Other non-market output covers output that is provided free, or at prices that are not economically significant, to other units. |

Other non-market output (P.13) can be subdivided into two items: ‘Payments for the other non-market output’ (P.131 ), which consist of various fees and charges, and ‘Other non-market output, other’ (P.132), covering output that is provided free.

• 3.24. | | | | --- | --- | | Definition: | Market producers are local KAUs or institutional units the major part of whose output is market output. |

It should be noted that if a local KAU or institutional unit is a market producer its main output is by definition market output, as the concept of market output is defined after having applied the distinction market, for own final use and other non-market to the local KAU and institutional unit that have produced that output.

• 3.25. | | | | --- | --- | | Definition: | Producers for own final use are local KAUs or institutional units the major part of whose output is for own final use within the same institutional unit. |

• 3.26. | | | | --- | --- | | Definition: | Other non-market producers are local KAUs or institutional units whose major part of output is provided free or at not economically significant prices. |

Institutional units: distinction between market, for own final use and other non-market

• 3.27. For the institutional units as producers, the distinction between market, for own final use and other non market is summarized in table 3.1. The implications for the classification by sectors are also shown.

Table 3.1 — The distinction between market producers, producers for own final use and other non-market producers for institutional units

Type of institutional unit	Type of institutional unit	Type of institutional unit	Type of institutional unit	Classification	Classification
Private or public?		NPI or not?	Sales cover more than 50 % of production costs?	Type of producer	Sector(s)
1. Private Producers	1.1.  Unincorporated enterprises owned by households (excluding quasi-corporate enterprises owned by households)			1.1. = Market or for own final use	Households
	1.2.  Other private producers (including quasi-corporate enterprises owned by households)	1.2.1.  Private NPIs	1.2.1.1.  Yes	1.2.1.1. = Market	Corporations
	1.2.  Other private producers (including quasi-corporate enterprises owned by households)	1.2.1.  Private NPIs	1.2.1.2.  No	1.2.1.2. = Other non-market	NPISH
		1.2.2.  Other private producers that are not NPI		1.2.2. = Market	Corporations
2. Public producers			2.1.  Yes	2.1. = Market	Corporations
2. Public producers			2.2.  No	2.2. = Other non-market	General Government

The table shows that in order to determine whether an institutional unit should be classified as a market producer, a producer for own-final use or another non-market producer several distinctions should be applied subsequently.

• 3.28. The first distinction is that between private and public producers. A public producer is a producer that is controlled by the general government. In case of NPIs, a public producer is an NPI that is controlled and mainly financed by the general government. All other producers are private producers. Control is defined as the ability to determine the general (corporate) policy or programme of an institutional unit by appointing appropriate directors or managers, if necessary. Owning more than half the shares of a corporation is a sufficient, but not a necessary, condition for control (see paragraph 2.26).

• 3.29. As table 3.1 shows, private producers are found in all sectors except the sector general government. In contrast, public producers are only found in the corporations sectors (non-financial corporations and financial corporations) and in the general government sector.

• 3.30. A specific category of private producers are the unincorporated enterprises owned by households. These are always market producers or producers for own final use. The latter occurs in case of the production of services of owner-occupied dwellings and the own-account production of goods. All unincorporated enterprises owned by households are classified to the household sector. An exception should only be made for quasi-corporate enterprises owned by households. These are market producers and classified to the non-financial and financial corporations sectors.

• 3.31. For the other private producers, a distinction should be made between private non-profit institutions and other private producers.

Definition:

A NPI is defined as a legal or social entity created for the purpose of producing goods and services whose status does not permit them to be a source of income, profit or other financial gains for the units that establish, control or finance them. In practice, their productive activities are bound to generate either surpluses or deficits but any surpluses they happen to make cannot be appropriated by other institutional units.

All the other private producers that are not NPIs are market producers. They are classified to the non-financial and financial corporations sectors.

• 3.32. In order to determine the type of producer and the sector for the private NPIs, a 50 % criterion should be applied:

• (a) if more than 50 % of the production costs are covered by sales, the institutional unit is a market producer and classified to the non-financial and financial corporations sectors;

• (b) if less than 50 % of the production costs are covered by sales, the institutional unit is another non-market producer and classified to the sector NPISH. But other non-market NPIs that are controlled and mainly financed by general government are classified to the general government sector.

• 3.33. In distinguishing market and other non-market producers by means of the 50 % criterion, sales and production costs are defined as follows:

• (a) sales cover the sales excluding taxes on products but including all payments made by general government or the institutions of the European Union and granted to any kind of producer in this type of activity, i.e. all payments linked to the volume or value of output are included, but payments to cover an overall deficit are excluded. This definition of sales corresponds to that of output at basic prices except that:
• (1) output at basic prices is only defined after it has been decided on whether the output is market or other non-market: sales are only used in valuing market output; other non-market output is valued at costs;
• (2) the payments made by general government to cover an overall deficit of public corporations and quasi-corporations are part or other subsidies on products as defined in paragraph 4.35. c. As a consequence, market output at basic prices includes also the payments made by general government to cover an overall deficit;

• (b) production costs are the sum of intermediate consumption, compensation of employees, consumption of fixed capital and other taxes on production. For this criterion other subsidies on production are not deducted. To ensure consistency of the concepts sales and production costs when applying the 50 % criterion, the production costs should exclude all costs made for own-account capital formation.

The 50 % criterion should be applied by looking over a range of years: only if the criterion holds for several years or holds for the present year and is expected to hold for the near future, it should be applied strictly. Minor fluctuations in the size of sales from one year to another do not necessitate a reclassification of institutional units (and their local KAUs and output).

• 3.34. Sales may consist of various elements. For example, in case of the health care services provided by a hospital sales may correspond to:

• (a) purchases by employers to be recorded as income in kind paid to their employees and final consumption expenditure by these employees;

• (b) purchases by private insurance companies;

• (c) purchases by social security funds and general government to be classified as social benefits in kind;

• (d) purchases by households without reimbursement (final consumption expenditure).

Only other subsidies on production and gifts (e.g. from charities) received are not treated as sales.

Similarly, the sale of transport services by an enterprise may correspond to intermediate consumption by producers, income in kind provided by employers, social benefits in kind provided by the government and purchases by households without reimbursement.

• 3.35. Private non-profit institutions serving businesses are a special case. They are usually financed by contributions or subscriptions from the group of businesses concerned. The subscriptions are treated not as transfers but as payments for services rendered, i.e. as sales. These NPIs are therefore market producers and are classified in the non-financial and financial corporations sectors.

• 3.36. In applying the 50 % criterion to the sales and production costs of private or public NPIs, including in sales all the payments linked to volume of output may be misleading in some specific cases. This can apply e.g. to the financing of the output of private and public schools: the payments by the general government can be linked to the number of pupils but be the subject of negotiation with the general government. In such a case, these payments need not be regarded as sales though they have an explicit link with the volume of output, e.g. with the number of pupils. This implies that a school mainly financed by such payments is another non-market producer. When the school is a public producer, i.e. when it is mainly financed and controlled by the government, it should be classified in the sector general government. When the school is a private other non-market producer, it should be classified in the sector NPISHs.

• 3.37. Public producers can be market producers or other non-market producers. If the 50 % criterion decides that the institutional unit should be regarded as a market producer, it is classified in the non-financial and financial corporations sectors. The 50 % criterion decides also when a government unit should be treated as a quasi-corporation owned by the government: only when it meets the 50 % criterion, a quasi-corporation should be created. If the institutional unit is another non-market producer, it is classified in the sector general government. The distinction between NPIs and other producers is thus irrelevant for classifying public producers.

Local KAUs and their outputs: distinction between market, for own final use and other non-market

• 3.38. After having applied the distinction market, for own final use and other non-market to institutional units as producers, the distinction can be applied to local KAU and their outputs. This relation is shown in table 3.2.

Table 3.2 — Institutional units, local KAUs and output and the distinction between market, for own final use and other non-market

Institutional unit	Principal local	Secondary local KAU(s)	Principal output of principal local KAU	Secondary output of principal local KAU	Principal output of secondary local KAU	Secondary output of secondary local KAU
Market producer	Market producer		Market output	Market output
				Output for own final use
		Market producer			Market output	Market output
						Output for own final use
		Producer for own final use			Output for own final use	Market output
Producer for own final use	Producer for own final use		Output for own final use	Market output
Other non-market producer	Other non-market producer		Other non-market output	Market output
				Output for own final use
				Other non-market output
		Market producer			Market output	Market output
						Output for own final use
		Other non-market producer			Other non-market output	Market output
						Output for own final use
						Other non-market output

• 3.39. For institutional units qualifying as market producers, the principal local KAU is of course also a market producer. The secondary local KAU can be a market producer, but also a producer for own final use. However, the secondary local KAU can by convention not be another non-market producer. This implies that the (secondary) local KAUs in the sectors non-financial corporations and financial corporations are all market producers or producers for own final use.

• 3.40. For institutional units that are other non-market producers, the principal local KAU will also be another non-market producer. The secondary local KAUs can be market producers or other non-market producers. This implies that the sectors general government and NPISH can contain some (secondary) local KAUs that are market producers (although all the institutional units in these sectors are other non-market producers). In order to determine whether the secondary local KAUs are market or other non-market producers the 50 % criterion should be applied.

• 3.41. After having applied the distinction market, for own final use and other non-market to institutional units and their local KAUs, the distinction can be applied to the outputs of local KAUs. This relation is shown in table 3.3.

Table 3.3 — The distinction market, for own final use and other non-market for local KAUs and their output

	Market producers	Producers for own final use	Other non-market producers	Total
Market output	X	x	x	Total market output
Output for own final use	x	X	x	Total output for own final use
Other non-market output	0	0	X	Total other non-market output
Total	Total output by market producers	Total output by producers for own final use	Total output by other non-market producers	Total output
X = large output; x = small output; 0 = no output (by convention).	X = large output; x = small output; 0 = no output (by convention).	X = large output; x = small output; 0 = no output (by convention).	X = large output; x = small output; 0 = no output (by convention).	X = large output; x = small output; 0 = no output (by convention).

• 3.42. By convention, local KAUs as market producers and as producers for own final use cannot supply other non-market output. Their output can thus only be recorded as market output or output for own final use and valued correspondingly (see paragraphs 3.46 to 3.52).

• 3.43. Local KAUs as other non-market producers can supply as secondary output market outputs and output for own final use. The output for own final use consists of own-account capital formation. The occurrence of market output should in principle be determined by applying the 50 % criterion to individual products: market output is output that is soldat at least 50 % of its production costs. This might be the case for instance when government hospitals charge economically significant prices for some of their services. Other examples are sales of reproductions by government museums and sales of weather forecasts by meteorological institutes.

• 3.44. In statistical practice, it may be difficult to make a clear distinction between the different products of local KAUs of government institutions and NPISHs. Even more, this is true for the production costs in relation to the different products. In that case, a simple solution is to treat all revenues of other non-market producers from their secondary activity (activities) as the revenues for one type of market output. This applies for example to a museum's revenues from the sale of posters and cards ([^E0052]).

• 3.45. Other non-market producers may also have revenues from the sale of their other non-market output at not economically significant prices, e.g. the museum's revenues from tickets for entrance. These revenues pertain to other non-market output. However, if both types of revenues (revenues from tickets and those from the sale of posters and cards) are difficult to distinguish, they can all be treated as either revenues for market output or revenues from other non-market output. The choice between these two alternative registrations should depend on the assumed relative importance of both types of revenues (from tickets versus those from the sale of posters and cards).

TIME OF RECORDING AND VALUATION OF OUTPUT

• 3.46. Output is to be recorded and valued when it is generated by the production process.

• 3.47. All output is to be valued at basic prices, but specific conventions hold for:

• (a) the valuation of other non-market output;

• (b) the valuation of total output of another non-market producer (local KAU);

• (c) the valuation of the total output of an institutional unit of which a local KAU is another non-market producer. (See paragraphs 3.53 to 3.56).

• 3.48. | | | | --- | --- | | Definition: | The basic price is the price receivable by the producers from the purchaser for a unit of a good or service produced as output, minus any tax payable (see point 4.27) on that unit as a consequence of its production or sale (i.e. taxes on products), plus any subsidy receivable on that unit as a consequence of its production or sale (i.e. subsidies on products). It excludes any transport charges invoiced separately by the producer. It includes any transport margins charged by the producer on the same invoice, even when they are included as a separate item on the invoice. |

• 3.49. Output for own final use (P.12) is to be valued at the basic prices of similar products sold on the market; as a consequence, net operating surplus or mixed income can occur for such output. This also applies to services of owner-occupied dwellings (see paragraph 3.64.). However, it will usually be necessary to value output of own-account construction by costs of production.

• 3.50. Additions to work-in-progress are valued in proportion to the estimated current basic price of the finished product.

• 3.51. If the value of output treated as work-in-progress is to be estimated in advance, it should be based on the actual costs incurred, plus a mark-up for the estimated operating surplus or an estimate of mixed income. The provisional estimates should subsequently be replaced by those obtained by distributing the actual value (when it becomes known) of the finished products. The latter is the sum of the values of:

• (a) finished products sold or bartered;

• (b) entries of finished products into inventories, less withdrawals;

• (c) finished products for own final use.

• 3.52. For buildings and structures acquired in an incomplete state, a value is estimated based on costs to date, including a mark up for operating surplus or mixed income. This mark-up results when the value can be estimated on the basis of the prices of similar buildings and structure. The amounts of stage payments may be used to approximate the values of gross fixed capital formation undertaken by the purchaser at each stage (assuming no advance payments or arrears).

If the own-account construction of a structure is not yet completed within a single accounting period, the value of the output and the corresponding gross fixed capital formation should be estimated by applying the fraction of the total costs of production incurred during the relevant period to the estimated current basic price. If it is not possible to estimate the basic price of the finished structure, it must be valued by its total costs of production. If some or all of the labour is provided free, as may happen with communal construction by households, an estimate of what the cost of paid labour would have been included in the estimated total production costs using wage rates for similar kinds of labour in the vicinity or region.

• 3.53. The total output of an other non-market producer (a local KAU) is to be valued at the total costs of production, i.e. the sum of:

• (a) intermediate consumption (P.2);

• (b) compensation of employees (D.1);

• (c) consumption of fixed capital (K.1);

• (d) other taxes on production (D.29) less other subsidies on production (D.39).

Other subsidies on production should be deducted. However, it should be realized that other subsidies on production to other non-market producers will often be absent in practice or only involve very small amounts (see paragraph 4.36).

By convention, interest payments are not included as costs of other non-market production (though they could be regarded as major costs of production in some cases, e.g. in the case of housing corporations). The costs of other non-market production also do not include an imputation for the rental value of the non-residential buildings owned and used in other non-market production.

• 3.54. The total output of an institutional unit is the sum of the total output of its constituent local KAUs. This applies also to institutional units that are other non-market producers.

• 3.55. In the absence of secondary market output by other non-market producers (local KAUs), other non-market output is to be valued at the costs of production. In the case of secondary market output by other non-market producers, other non-market output is valued as a residual item i.e. as the difference between the total costs of production of other non-market producer minus their revenues from market output.

• 3.56. In principle, market output by other non-market producers is to be valued at basic prices. However, even though another non-market local KAU may have sales receipts, its total output covering both its market and its other non-market output (and possibly also output for own final use), is still valued by the production costs. The value of its market output is given by its receipts from sales of market products, the value of its other non-market output being obtained residually as the differences between on the one hand the values of its total output and, on the other hand, its market output and output for own final use. The value of its receipts from the sale of other non-market goods or services at prices that are not economically significant remain as part of the value of its other non-market output.

• 3.57. For some specific types of output, the times of recording and the valuation of output are subject to the following clarifications and exceptions, given in order of CPA sections.

• 3.58 A. Products of agriculture, hunting and forestry;

The output of agricultural products should be recorded as being produced continuously over the entire period of production (and not simply when the crops are harvested or animals slaughtered).

Growing crops, standing timber and stocks of fish or animals reared for purposes of food should be treated as inventories of work-in-progress during the process, and transformed into inventories of finished products when the process is completed.

• 3.59. D. Manufactured products;

When a contract of sale is agreed in advance for the construction of a building or other structure extending over several accounting periods, the output produced each period is treated as being sold to the purchaser at the end of the period: i.e. in the purchaser's fixed capital formation rather than work-in-progress in the construction industry. In effect, the output produced is treated as being sold to the purchaser in stages as the latter takes legal possession of the output. When the contract calls for stage payments, the value of the output may often be approximated by the value of stage payments made each period. In the absence of a contract of sale, however, the incomplete output produced each period is recorded as work-in-progress.

• 3.60. G. Wholesale and retail trade services; repair services of motor vehicles, motorcycles and personal and household goods

The output of wholesale and retail services is measured by the trade margins realized on the goods they purchase for resale.

Definition:	A trade margin is the difference between the actual or imputed price realized on a good purchased for resale and the price that would have to be paid by the distributor to replace the good at the time it is sold or otherwise disposed of.

By convention, holding gains and losses are not included in the trade margin. However, in practice, data sources may not allow for separating out all the holding gains and losses.

• 3.61. H. Hotel and restaurant services

The value of the output of the services of hotels, restaurants and cafes includes the value of the food, beverages, etc. consumed.

• 3.62. I. Transport, storage and communication services

The output of transport services is measured by the value of the amounts receivable for transporting goods or persons. Transportation for own use within the local KAU is considered ancillary activity and is not separately identified and recorded.

The output of storage services is measured as the value of an addition to work-in-progress, either additional output in the sense of transportation over time (e.g. storage on behalf of other local KAUs) or a physical change (e.g. in the case of the maturing of wine).

The output of travel agency services is measured as the value of service charges of agencies (fees or commission charges) and not by the full expenditures made by travellers to the travel agency. The latter may e.g. also include charges for transport by third parties.

The output of tour operator services is measured by the full expenditure made by travellers to the tour operator.

The distinction between travel agency services and tour operator services is that travel agency services amount only to intermediation on behalf of the traveller, while tour operator services create a new product, i.e. a tour is arranged of which the prices of its various components (e.g. travel, accommodation and entertainment) are not recognizable as such for the traveller.

• 3.63. J. Financial intermediation services (this includes insurance services and pension funding services)

The output of financial intermediation for which no explicit charges are made is measured, by convention, as the total property income received by the units providing the services minus their total interest payments, excluding the value of any income received from the investment of their own funds (as such income does not arise from financial intermediation), and, in the case of secondary insurance activities by a financial intermediary, excluding the income from investment of insurance technical reserves. Holding gains and losses should be ignored in measuring this output, because throughout the system holding gains are not recorded in the production account but in a separate account (other changes in assets account). This applies also to holding gains on foreign exchange and securities by professional dealers (though their holding gains may be generally positive and be regarded by the dealers themselves as part of their normal revenues). However, the trade margins on foreign exchange and securities (i.e. the common differences between the purchasers' prices for the dealer and the purchasers' price for the buyer) are to be included in output, like for wholesale and retail traders. Analogously, there may also be data problems in distinguishing such trade margins from the holding gains; these should be overcome as best as possible.

The output of services of financial intermediation provided by central banks should be measured in the same way as those provided by other financial intermediaries.

The activity of money lenders who lend only their own funds is not treated as the production of services.