Thursday, November 11
Mr. Khay Phousnith, Senior Economist, Financial Institutions Division, Statistics Department, International Monetary Fund
Mr. Brian Kwok Chung Yee, Senior Economist, Financial Institutions Division, Statistics Department, International Monetary Fund
Mr. Patrick Imam, Deputy Director, Joint Vienna Institute
Phousnith Khay and Brian Kwok Chung Yee from the Financial Institutions Division of the IMF Statistics Department discussed the 2019 Financial Soundness Indicators (FSIs) Compilation Guide (2019 FSIs Guide) and the FSI data migration to the new reporting templates.
Starting in the late 1990s, following various financial crisis in emerging market economies, the IMF launched an ambitious data collection effort to monitor the soundness of the global financial system and support economic and financial analysis. FSIs were developed to provide insight into the financial health and soundness of a country’s financial institutions as well as corporate and household sectors. They looked at vulnerabilities of financial systems in five areas of interests: capital adequacy, asset quality, earnings and profitability, liquidity, and sensitivity to market risk. Most countries now report FSIs.
The global financial crisis of 2008/9 revealed weaknesses in the approach to identify and mitigate risks, including insufficient attention being devoted to aggregate risks in the financial system or in identifying the linkages between the real and financial sectors. In addition, large international banks were found to hold insufficient capital against their risk exposures, particularly through special purpose vehicles, securitized assets, and derivatives. Consequently, the FSI methodology was enhanced, and new financial sector data collection initiatives were launched to close these important data gaps. This included supplementing FSIs with tail risk and macroeconomic conditions measures to strengthen macro-financial surveillance.
Concretely, the 2019 FSIs Guide updates the methodological guidance on the concepts and definitions, data sources and methods for compiling and disseminating FSIs. As an example, it includes new indicators to expand the coverage of the financial sector, including other financial intermediaries, money market funds, insurance corporations, pension funds, and nonfinancial sectors, including nonfinancial corporations and households. In all, the 2019 FSIs Guide recommends the compilation of 50 FSIs—13 of them new. Additions such as capital measures based on Basel III, liquidity and asset quality metrics, and concentration and distribution measures will serve to enhance the forward-looking aspect of FSIs and contribute to increased policy focus on the stability of the financial system.
This webinar reviewed the main methodological changes brought about by the 2019 FSIs Guide for compiling FSIs for deposit-takers, other financial corporations, and the real sector. Specifically, the 2019 FSIs Guide is more prescriptive than the previous methodology in order to improve cross-country comparability; it reflects recent changes in regulatory and accounting standards; and it includes a new Concentration and Distribution Measures (CDM) template. The webinar also covered new FSI report forms related to the expanded coverage of the financial sector, including other financial intermediaries, money market funds, insurance corporations, pension funds, nonfinancial corporations, and households, as well as plans for the migration of historic data and metadata to the new reporting forms.