17.8 Product Categories
Classifying accounts by economic activity
Product Categories classify B-accounts and R-accounts according to the economic activity conducted through each account. They allow the Central Bank Payment System (CBPS) to distinguish production-chain payments, retail sales, investment, and other non-consumptive transfers without investigating each transaction or deciding whether it is desirable.
A Product Category attaches to an account, not to a Person or organisation. A Person may open separate accounts for separate activities and may operate several kinds of business without obtaining a business licence. The single category on each account makes the purpose of that account and its transfers explicit while leaving ownership, organisation, production, and prices to the account owner.
B-categories and R-categories
Every Product Category is classified as either a B-category or an R-category, never both. A B-category may be assigned only to a B-account, and an R-category may be assigned only to an R-account. This prevents the same category from being used ambiguously for both untaxed production and taxable consumption.
Every B-account has exactly one B-category and every R-account has exactly one R-category. This does not mean that the Products described by different categories must be disjoint. Broad categories may overlap, and the same Product may be described by more than one category. The account owner chooses the single category that describes the economic activity conducted through that account and uses separate accounts for substantially different activities.
| Category class | Account type | Function | Examples |
|---|---|---|---|
| B-category | B-account | Production, wholesale trade, investment, or another non-consumptive activity | import-wholesale, foreign-currency |
| R-category | R-account | Products supplied for consumption | import-retail |
C-accounts and personal consumption
C-accounts are personal consumption accounts and have no Product Category. A Person uses a C-account to buy Products for their own consumption or that of their dependants. Product Categories apply to the supplying R-account, allowing the CBPS to recognise the payment as consumption without assigning an economic activity to the consumer.
External C → R payments are permitted and consumption tax is collected automatically. Because C-accounts do not participate in the Compatibility Relation, they cannot be used as production or wholesale accounts. A Person conducting productive activity instead uses a B-account whose Product Category describes that activity.
Coarse categories and a permissive relation
Product Categories are deliberately broad, few in number, public, and stable. They are not intended to describe individual Products, occupations, firms, or approved business models. Excessively detailed categories would turn account classification into economic regulation and would make ordinary production fragile.
Because categories are broad descriptions rather than a partition of all Products, overlap is expected and does not create ambiguity in the CBPS. Each account declares one category, and that declared category is the value used for its compatibility checks. Choosing any category that describes the Products supplied through the account is valid; knowingly choosing one that does not is a misuse of the account.
The Compatibility Relation is correspondingly permissive. It includes every physically possible and economically realistic production relationship and excludes relationships only where the claimed Product flow is not realistic or would disguise consumption as production. Its purpose is to keep tax and accounting routes correct, not to direct investment, protect established producers, or require political approval for trade.