If you have money in your purse or wallet, then you have a financial asset called currency. If you have a bank account that is in credit, then you have a financial asset of deposits. You may have paid into a pension fund, in which case part of that pension fund is one of your financial assets. You may even own some company shares, which are also financial assets. If you work for a private company you may have stock options as a perk of the job, and these options are considered a financial asset that you own, even if you don’t buy the stock.
As a rule, every financial asset owned is a financial liability owed by someone else. Your asset of money on deposit is a liability of the bank. If you own shares in a company, those shares are part of the company’s liabilities. If a household has mortgage debt, that is a financial liability of loans for that household; but the same amount is a financial asset for the bank that loaned the money. We say that the counterpart to the household liability is the bank asset. The exception to the rule of counterparts is ‘monetary gold’, that is gold owned by central banks. Monetary gold assets have no counterpart liability.
There are some financial assets that are unlikely to be held by an individual. Bonds, known also as debt securities, are usually bought by institutional investors after they are issued by governments or corporations. Monetary gold is only held by central banks (your gold jewellery is Valuables, a non-financial asset). Special Drawing Rights are a kind of asset only issued by the International Monetary Fund to governments and central banks.
A financial asset is a store of value, a way of carrying value from one period to the next. The formal definition of financial assets are all financial claims, equity and the gold bullion element of monetary gold. A financial claim is then defined as the right to receive a payment (or a series of payments) from a debtor.
All the financial assets held in Ireland are shown in the Financial Account produced every year by the CSO and every quarter by the Central Bank of Ireland.
Many financial assets have an income associated with them: the assets are not just storing value, they are being placed with a debtor who pays for being allowed to use them. For example, loans and deposits usually earn interest from the borrower, owners of shares usually receive a dividend from the liable company or fund. This income on financial assets is called Investment Income and it is shown in the non-financial account.
The full list of financial assets (and the codes used):
F1 Monetary gold and special drawing rights
F2 Currency and deposits
F3 Debt securities (bonds)
F4 Loans
F5 Equity and investment fund shares
F6 Insurance, pension and standardised guarantee schemes
F7 Derivatives and employee stock options
F8 Other accounts receivable/payable