Part F - Change in net worth

The main purpose for the recording of other economic flows in GFS is to record the effects on net worth. Other economic flows are recorded in the statement of stocks and flows, the statement of stocks and flows of financial assets and liabilities by source, and the statement of total changes in net worth. Paragraph 10.2 of the IMF GFSM 2014 describes the change in net worth due to other economic flows as the sum of the change in net worth due to holding gains or losses and the change in net worth due to other changes in the volume of assets. In particular:

• The change in net worth due to holding gains and losses is defined as the sum of the positive or negative holding gains on all assets and liabilities.
• The change in net worth due to other changes in volume is defined as the sum of the positive and negative other changes in the volume of assets and liabilities.

The types of other economic flow events that add to net worth include the discovery and extraction of mineral deposits or other subsoil assets, natural growth of uncultivated biological resources (such as natural forests or fish stocks) and the recognition of assets not currently included in the balance sheet. The type of events that result in reductions to net worth include the unilateral writing off of bad debts by creditors, destruction of assets by fire (or other catastrophe) and the depletion of naturally occurring assets (e.g. virgin forests, fisheries) as a result of physical removal or use. Also included in other volume changes are changes to net worth resulting from reclassifications of institutional units, or assets / liabilities.

Paragraph 10.3 of the IMF GFSM 2014 states that many other economic flows change both the value of an asset or a liability and the value of net worth by the same amount. For example, holding gains that lead to an increase in the value of assets increase net worth. In contrast, other economic flows related to reclassifications do not affect total net worth. These reclassifications change the value of two assets or two liabilities by the same amount but with opposite signs, or they change one asset and one liability by the same amount, for example, the reclassification of a loan when it becomes negotiable.