Financial instrument

Why are financial instruments categorized?

Categorising financial instruments provides more structured information on the financial assets and liabilities of the various institutional sectors. It also supports the analysis of a sector’s financial behaviour, for example, the type of instruments its savings are channelled into, its maturity preferences, and its sources of funding.

Financial instruments are classified and defined according to international standards. There are eight categories. Each category can also be further broken down according to different characteristics, such as maturity (e.g. short-term or long-term).

Financial instruments are mostly classified according to their liquidity, negotiability and legal characteristics. The eight categories of financial instrument are as follows:

• F1-Monetary gold and special drawing rights
• F2-Currency and deposits
• F3-Debt securities
• F4-Loans
• F5-Equity and investment fund shares
• F6-Insurante, pensions and standardised guarantee schemes
• F7-Financial derivatives and employee stock options
• F8-Other accounts receivable/payable.

Classification of financial instruments (European System of Accounts 2010).