Public Information Notices





Public Information Notice (PIN) No. 99/25
March 26, 1999
International Monetary Fund
700 19th Street, NW
Washington, D.C. 20431 USA

IMF Strengthens Standards for Public Dissemination of Data on International Reserves

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.

The IMF has taken action to strengthen the specifications for dissemination of data on international reserves under its Special Data Dissemination Standard (SDDS).

Background

The strengthening of the SDDS is part of the ongoing efforts to improve the architecture of the international financial system. Recent financial crises have underscored the importance of more comprehensive and timely information on international reserves, to help promote informed decision-making in the public and private sectors and thereby improve the functioning of global financial markets. The proposals for reserves data under the SDDS were developed in response to guidance from the IMF Interim Committee. They are intended to establish new standards for the provision of information to the public on the amount and composition of reserve assets, other foreign exchange assets held by the central bank and the government, short-term foreign liabilities, and related activities that can lead to demands on reserves (such as financial derivatives positions and guarantees extended by the government for private borrowing).

The reserves data template, spelling out the information to be provided, reflected the experience in member countries, the results of two previous Executive Board discussions, and comments received through consultations with data users in the public and private sectors and statistical compilers. From the outset, there was widespread interest in increasing transparency in this area. However, many Fund members have expressed concerns about the resource costs of compiling and disseminating more detailed, frequent, and timely data and the possibility that this would reduce the effectiveness of exchange market intervention operations. The final decisions reflected a balancing of these objectives and concerns. The template was finalized in cooperation with a working group of the Committee on the Global Financial System of the G-10 central banks. The G-10 central banks have also adopted the template for use in the data dissemination activities of that Committee. The template is attached, and copies also may be found on the websites of the IMF (www.IMF.org) and the BIS (www.bis.org).

The SDDS is a standard of good practices in the dissemination of economic and financial data, to which IMF member countries may subscribe on a voluntary basis. It is intended for use mainly by countries that either have or seek access to international financial markets, to signal their commitment to the provision of timely and comprehensive data. As of March 1999, there were 47 subscribers to the SDDS.

Executive Board Discussion

Executive Directors welcomed the revised staff proposals to strengthen the prescriptions for the international reserves data category under the SDDS. In particular, Directors appreciated that the revised proposals represented an attempt to balance the objective of strengthening reserves data dissemination against concerns about the costs of observing the new standards and the confidentiality of information on intervention operations.

In commenting on the reserves data template, a few Directors regretted that the template did not contain as much information as the initial staff proposals in December 1998. Some other Directors suggested that the degree of detail being requested, particularly on reserve-related liabilities and other potential drains on reserves, was still excessive. On the whole, however, most Executive Directors were satisfied that the template provided a good basis for efforts to enhance the availability to the public of more frequent, timely, and comprehensive information on reserves and related items.

Most Directors considered that recent international financial crises demonstrated the importance of disseminating information on reserves and related items with a short lag and a relatively high frequency. In that context, several Directors noted that publication of reserves data on a weekly basis, with a lag of only a few days, had become increasingly common among emerging market countries active in international capital markets; these Directors encouraged other members to follow such practices. However, since the reserves template called for much more detailed data, many Directors also stressed that there would be a need for countries to adapt their internal reporting systems to generate the information needed under that template. Several Directors suggested that more consultation on the template, particularly with developing countries, would be useful. Directors looked forward to the completion of the operational guidelines for compilers after the Spring Meetings. They also considered that it was appropriate for the SDDS prescriptions for the periodicity and timeliness of data dissemination in connection with the new template to be well balanced and to reflect the consensus among members.

In that context, most Directors agreed that the SDDS prescription should be for dissemination of full data corresponding to the new template on a monthly basis, with a lag of no more than one month, although data on total reserve assets would still be prescribed for dissemination on a monthly basis with a lag of no more than one week. The dissemination of data for the full template on a weekly basis, with a one week lag, was to be encouraged. This proposal is therefore adopted.

Bearing in mind the advantages of more frequent and timely data, as well as the concerns of some members about the costs of disclosure, Directors agreed that the prescriptions for the periodicity and timeliness of reserves data dissemination should be reassessed in the context of the Third Review of the SDDS, around the end of 1999. A few Directors were of the view that the issue of periodicity and timeliness should be revisited after sufficient experience had been accumulated under the enhanced SDDS and more progress made in addressing the issue of symmetry in data dissemination between the public and private sectors.

Directors indicated that the transition period for observance of the new standards should be through March 31, 2000.

Executive Directors were generally satisfied that it had been possible to reach conclusions on this matter. At the same time, a number of Directors noted that the SDDS prescriptions for reserves data were a minimum standard which many members already exceeded. They underscored their hope that for such countries the present decision would not lead to any reduction in the frequency, or increase in the lag, in reporting, or a reduction in the quality of data.

Many Directors stressed that it would be important for efforts to strengthen the dissemination of information on public sector financial operations to be accompanied by improvements in the availability of information on the activities of private institutions in international financial markets.




Data Template on International Reserves/Foreign Currency Liquidity

(Information to be disclosed by the monetary authorities and
other central government, excluding social security) (1) (2) (3)


I. Official reserve assets and other foreign currency assets (approximate market value) (4)

  1. Official reserve assets
    1. Foreign currency reserves (in convertible foreign currencies)
      1. Securities
           of which:
              issuer headquartered in reporting country
      2. total deposits with:
        1. other central banks and BIS
        2. banks headquartered in the reporting country
              of which:
                located abroad
        3. banks headquartered outside the reporting country
             of which:       located in the reporting country
    2. IMF reserve position
    3. SDRs
    4. gold (including gold on loan) (5)
    5. other reserve assets (specify)

  2. Other foreign currency assets (specify)

II. Predetermined short-term net drains on foreign currency assets (nominal value)

    Maturity breakdown (residual maturity)


Total Up to 1 month More than 1 month
and up to 3 months
More than 3 months
and up to 1 year
1. Foreign currency loans and securities (6)        
2. Aggregate short and long positions in forwards and futures in foreign currencies vis-a-vis the domestic currency (including the forward leg of currency swaps) (7)        
        (a) Short positions        
        (b) Long positions        
3. Other (specify)        


III.Contingent short-term net drains on foreign currency assets (nominal value)

    Maturity breakdown (residual maturity, where applicable)


Total Up to 1 month More than
1 month and
up to 3
months
More than
months and
up to 1
year
1. Contingent liabilities in foreign currency        
        (a) Collateral guarantees on debt falling due within 1 year        
        (b) Other contingent liabilities        
2. Foreign currency securities issued with embedded options (puttable bonds) (8)  
3. Undrawn, unconditional credit lines (9)        
        (a) with other central banks        
        (b) with banks and other financial institutions headquartered in the reporting country        
        (c) with banks and other financial institutions headquartered outside the reporting country        
4. Aggregate short and long positions of options in foreign currencies vis-a-vis the domestic currency (10)        
        (a) Short positions        
              (i) Bought puts        
              (ii) Written calls        
        (b) Long positions        
              (i) Bought calls        
              (ii) Written puts        
   PRO MEMORIA: In-the-money options (11)        
   (1) At current exchange rates        
        (a) Short position        
        (b) Long position        
   (2) + 5 % (appreciation of 5% of the domestic currency)        
        (a) Short position        
        (b) Long position        
    Maturity breakdown (residual maturity, where applicable)


Total Up to 1 month More than
1 month and
up to 3
months
More than
months and
up to 1
year
   (3) - 5 % (depreciation of 5% of the domestic currency)        
        (a) Short position        
        (b) Long position        
   (4) +10 %        
        (a) Short position        
        (b) Long position        
   (5) - 10 %        
        (a) Short position        
        (b) Long position        
   (6) Other (specify)        
IV. Memo items
  1. To be reported with standard periodicity and timeliness: (12)
    1. short-term domestic currency debt indexed to the exchange rate
    2. financial instruments denominated in foreign currency and settled by other means (e.g., in domestic currency) (13)
    3. pledged assets (14)
    4. securities lent and on repo (15)
    5. financial derivative assets (net, marked to market) (16)
    6. derivatives (forward, futures, or options contracts) that have a residual maturity greater than one year, which are subject to margin calls.
  2. To be disclosed less frequently (e.g., once a year):
    1. currency composition of reserves (by groups of currencies)


1. In principle, only instruments denominated and settled in foreign currency (or those whose valuation is directly dependent on the exchange rate and that are settled in foreign currency) are to be included in categories I, II, and III of the template. Financial instruments denominated in foreign currency and settled in other ways (e.g., in domestic currency or commodities) are included as memo items under Section IV.
2. Netting of positions is allowed only if they have the same maturity, are against the same counterparty, and a master netting agreement is in place. Positions on organized exchanges could also be netted.
3. Monetary authorities defined according to the IMF Balance of Payments Manual, Fifth Edition.
4. In cases of large positions vis-a-vis institutions headquartered in the reporting country, in instruments other than deposits or securities, they should be reported as separate items.
5. The valuation basis for gold assets should be disclosed; ideally this would be done by showing the volume and price.
6. Including interest payments due within the corresponding time horizons. Foreign currency deposits held by nonresidents with central banks should also be included here. Securities referred to are those issued by the monetary authorities and the central government (excluding social security).
7. In the event that there are forward or futures positions with a residual maturity greater than one year, which could be subject to margin calls, these should be reported separately under Section IV.
8. Only bonds with a residual maturity greater than one year should be reported under this item, as those with shorter maturities will already be included in Section II, above.
9. Reporters should distinguish potential inflows and potential outflows resulting from contingent lines of credit and report them separately, in the specified format.
10. In the event that there are options positions with a residual maturity greater than one year, which could be subject to margin calls, these should be reported separately under Section IV.
11. These "stress-tests" are an encouraged, rather than a prescribed, category of information in the IMF's Special Data Dissemination Standard (SDDS). Could be disclosed in the form of a graph. As a rule, notional value should be reported. However, in the case of cash-settled options, the estimated future inflow/outflow should be disclosed. Positions are "in the money" or would be, under the assumed values.
12. Distinguish between assets and liabilities where applicable.
13. Identify types of instrument; the valuation principles should be the same as in Sections I-III. Where applicable, the notional value of nondeliverable forward positions should be shown in the same format as for the nominal value of deliverable forwards/futures in Section II.
14. Only assets included in Section I that are pledged should be reported here.
15. Assets that are lent or repoed should be reported here, whether or not they have been included in Section I of the template, along with any associated liabilities (in Section II). However, these should be reported in two separate categories, depending on whether or not they have been included in Section I. Similarly, securities that are borrowed or acquired under repo agreements should be reported as a separate item and treated symmetrically. Market values should be reported and the accounting treatment disclosed.
16. Identify types of instrument. The main characteristics of internal models used to calculate the market value should be disclosed.



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