## EXECUTIVE SUMMARY

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---

### Purpose and consultations
- Executive Board requested periodic review of the list of financial soundness indicators (FSIs) to reflect evolving Fund surveillance priorities, the changing financial environment, and countries' capacity to compile FSIs.
- Purpose of paper: inform Executive Directors on outcomes of STA consultations on revising the current FSI list in response to the global financial crisis and the Basel III Accord; G-20 Data Gaps Initiative Recommendation no. 2 calls on the IMF to review the FSI list.
- STA consultation partners:
  - FSI Reference Group (broad-based group of national and international experts).
  - International standard setting bodies, IMF departments, all FSI-reporting countries, and concerned international organizations.
- STA actions:
  - Keep the Executive Board informed periodically on developments, including work on revising the FSI Compilation Guide (FSICG).

### Main changes to the FSI list
- Net change in indicators:
  - 19 new FSIs will be added to the list.
  - 5 FSIs will be dropped.
- Expanded coverage:
  - New indicators extend coverage to: money market funds (MMFs), insurance corporations (ICs), pension funds (PFs), other nonbank financial institutions (OFCs), non-financial corporations (NFCs), and households (HHs).
- Labeling change:
  - “Encouraged FSIs” relabeled to “additional FSIs” to avoid confusion with SDDS terminology.

### Rationale and guiding factors for revisions
- Key factors underpinning modifications:
  - Changes in regulatory concepts from Basel III.
  - Need to maintain continuity of existing core FSIs.
  - Enhancements to the SDDS and establishment of the SDDS Plus.
  - Development of new FSIs for OFCs given sector heterogeneity and rising importance.
  - Strengthening FSIs for NFCs and HHs to better monitor financial soundness.
  - Parsimonious focus on analytically useful indicators to limit reporting burden.
  - Improve FSIs for identifying and monitoring systemic risks by producing concentration and distribution measures.

### Work program, outreach, and capacity building
- STA convened FSIRG in November 2011 (representatives from 32 countries and 10 international and regional organizations attended).
- STA prepared three position notes addressing: deposit-takers (DTs); OFCs; and NFCs/HHs/markets/other issues.
- Training, seminars, and workshops conducted to strengthen country capabilities to produce, analyze, and disseminate FSIs.
- STA assumed responsibility for preparing an FSI Statistical Appendix associated with the Global Financial Stability Report (GFSR) in April 2011; appendix consists of six tables covering about 110 countries, published semi-annually.
- Coverage statistics (as of July 31, 2013):
  - 80 countries reported their FSIs (data and metadata) to STA on a regular basis for public dissemination on the IMF’s FSI website.
  - 69 out of the 80 FSI-reporting countries submit their data and metadata on a monthly or quarterly basis.
- SDDS/SDDS Plus:
  - The SDDS encourages subscribers to disseminate seven FSIs on a quarterly frequency.
  - The SDDS Plus requires adherents to disseminate seven FSIs on a quarterly basis.
  - SDDS encourages “Net open position in foreign exchange to capital”; SDDS Plus requires “Residential real estate prices.”

### Basel III implications for FSIs (capital and liquidity)
- Basel III implementation timetable:
  - Basel III is to be fully implemented in 2019, with a phase-in period starting in 2013.
  - New Basel III capital standard is in place from January 2013 onwards.
  - The new leverage ratio will be disclosed starting January 2015 and implemented in January 2018 after final calibration.
- Implications for capital-based FSIs:
  - Indicators aligned with BCBS capital adequacy definitions, DT solvency measures, or credit/market risk vulnerabilities must be calculated based on the Basel III definition of regulatory capital in adopting countries.
  - Use total regulatory capital (Tier 1 and Tier 2) rather than the narrower Tier 1 for all solvency indicators except Tier 1 to RWAs and the regulatory leverage ratio.
  - Include as core indicators the new Basel III ratios: Common Equity Tier 1 (CET1) to RWAs and the Basel III leverage ratio; these should become “active” when data become publicly available under the Basel III schedule.
- Capital data aggregation and concurrent Basel regimes:
  - For countries implementing Basel III simultaneously with Basel I and/or Basel II, sectoral capital components should be derived by summing Basel I and/or Basel II capital components with the corresponding Basel III components.
  - “This issue will be addressed more fully in the revision of the FSICG.”

### Enhancing forward-looking features: concentration and distribution measures
- Need: augment sectoral FSIs with concentration and distribution measures to improve forward-looking usefulness and identify systemic risk build-up.
- Proposed measures:
  - Standard deviation.
  - Quintiles.
  - Deciles (especially the left or right 10-percent tail).
  - Minimum and maximum values, and flag whether institutions exceed five percent of total assets of the banking (or OFC) sector.
  - A concentration index (i.e., Herfindahl index).
- STA plans a voluntary pilot exercise with selected FSI-reporting countries to compile concentration and distribution measures for DTs and other selected FSIs (e.g., debt to equity for NFCs).

### Changes to core and additional FSIs (selected, exact entries preserved)
- Core FSIs for Deposit Takers (additions and changes):
  - I01 Regulatory capital to risk-weighted assets
  - I02 Regulatory Tier 1 capital to risk-weighted assets
  - I03 (NEW) Common equity Tier 1 to risk-weighted assets [Solvency ratio]
  - I04 Capital to assets
  - I05 Non-performing loans net of provisions to capital
  - I06 Non-performing loans to total gross loans
  - I07 (NEW) Provisions to non-performing loans
  - I08 Sectoral distribution of loans to total loans
  - I09 Return on assets
  - I10 Return on equity
  - I11 Interest margin to gross income
  - I12 Noninterest expenses to gross income
  - I13 Liquid assets to total assets
  - I14 Liquid assets to short-term liabilities
  - I15 (NEW) Available amount of stable funding to required amount of stable funding  [Net stable funding ratio]
  - I16 Net open position in foreign exchange to capital
- Core FSI for Real Estate Markets:
  - I17 Residential real estate prices (Percentage change/last 12 months) — moved from additional to core.
- Additional FSIs for Deposit Takers:
  - I18 Large exposures to capital
  - I19 Geographical distribution of loans to total loans
  - I20 Gross asset position in financial derivatives to capital
  - I21 Gross liability position in financial derivatives to capital
  - I22 Trading income to total income
  - I23 Personnel expenses to noninterest expenses
  - I24 Spread between reference lending and deposit rates (base points)
  - I25 Spread between highest and lowest interbank rates (base points)
  - I26 Customer deposits to total (non-interbank) loans
  - I27 Foreign-currency-denominated loans to total loans
  - I28 Foreign-currency-denominated liabilities to total liabilities
  - I29 (NEW) Credit growth to private sector
- Additional FSIs for OFCs (new subsector split and entries):
  - I30 (NEW) OFC assets (percent of total financial system assets)
    - MMF assets (percent of total financial system assets)
    - IC assets (percent of total financial system assets)
    - PF assets (percent of total financial system assets)
    - Other OFC assets (percent of total financial system assets)
  - I31 (NEW) OFC assets (percent of GDP)
    - MMF assets (percent of GDP)
    - IC assets (percent of GDP)
    - PF assets (percent of GDP)
    - Other OFC assets (percent of GDP)
- Additional FSIs for MMFs:
  - I32 (NEW) Sectoral distribution of investments (percent of total investments) [Assets quality]
    - Central bank
    - Deposit takers
    - Other financial corporations
    - General government
    - Nonfinancial corporations
    - Non residents
  - I33 (NEW) Maturity distribution of investments (percent of total investments) [Liquidity]
    - 1-30 days
    - 31-90 days
    - >90 days
- Additional FSIs for ICs:
  - I34 (NEW) Shareholder equity to invested assets [Capital ICs]
  - I35 (NEW) Total premium income minus premium ceded by primary insurers to total premium income [Risk retention ratio ICs]
  - I36 (NEW) Return on assets [Earnings and profitability]
  - I37 (NEW) Return on equity [Earnings and profitability]
- Additional FSIs for PFs:
  - I38 (NEW) Liquid assets to estimated pension payments in the next year [Liquidity ratio]
  - I39 (NEW) Return on assets [Earnings and profitability]
- Additional FSIs for NFCs:
  - I40 Total debt to equity
    - external debt to equity
    - foreign currency debt to equity
  - I41 (NEW) Return on assets
  - I42 Return on equity
  - I43 Earnings to interest and principal expenses
  - I44 (NEW) Earnings to interest expenses
  - I45 (NEW) Liquid assets to total assets
  - I46 (NEW) NFC debt to GDP
- Additional FSIs for Households:
  - I47 Household debt to GDP
  - I48 Household debt service and principal payments to income
  - I49 (NEW) Household debt to household disposable income
- Additional FSIs for Real Estate Markets:
  - I50 Commercial real estate prices (Percentage change/last 12 months)
  - I51 Residential real estate loans to total gross loans
  - I52 Commercial real estate loans to total gross loans
- Deletions (excerpt preserved):
  - Core FSIs for Deposit takers: Net open position in equities to capital (deleted)
  - Additional FSIs for Nonfinancial corporations: Net foreign exchange exposure to equity (deleted)
  - Additional FSIs for Market Liquidity: Average bid-ask spread in the securities market; Average daily turnover ratio in the securities market (deleted)

### OFC subsector split and data considerations
- OFC sector split into four subsectors:
  - (i) money market funds (MMFs);
  - (ii) insurance corporations (ICs);
  - (iii) pension funds (PFs); and
  - (iv) other OFCs.
- FSIs for OFCs and subsectors included in the additional set; no further split at present due to limited data availability and comparability.

### Consolidation basis and reporting frequency
- Consolidation guidance to improve cross-country comparability:
  - Retain two recommended consolidation bases for DTs: cross-border and cross-sector for all domestically incorporated (CBCSDI) and domestically controlled cross-border and cross-sector, plus a third option, domestic consolidation (DC), for countries with few or no foreign branches/subsidiaries.
  - Other consolidation bases may remain where legal constraints apply.
  - OFC subsectors: follow basis used for current I26—either cross-border or DC.
  - PFs: only DC applicable.
  - HHs: only DC applicable.
  - NFCs: either cross-border or DC depending on foreign activity and data availability.
- Frequency and timeliness guidance:
  - Quarterly data compilation encouraged for all countries and all FSIs, particularly DTs, with a time lag of one quarter.
  - For FSIs on NFCs, HHs, and possibly OFCs, quarterly frequency encouraged but semi-annual and annual frequencies may be needed.
  - For semi-annual and annual data, reporting expected with a time lag of one to two quarters.
  - Countries facing timeliness difficulties encouraged to report preliminary data based on a sample, with preliminary nature indicated in metadata.
  - Breaks in time series for supervisory-based indicators are unavoidable due to Basel III implementation; FSIRG emphasized managing time series breaks and encouraged submission of revised historical series for non-supervisory indicators.

### Change of labeling and comparability work
- Label change: “Encouraged FSIs” → “Additional FSIs” to avoid SDDS confusion.
- Ongoing priority: enhance comparability and homogeneity of FSIs across countries through FSICG revisions and metadata practices.

### Pilot exercise and capacity building
- STA will:
  - invite all FSI reporting countries to participate voluntarily in pilot for concentration and distribution measures;
  - carry out the pilot exercise and report back to the FSIRG.
- Capacity building actions:
  - update training materials on FSIs;
  - continue training courses, workshops, seminars, and technical assistance missions;
  - seek donor funding to augment capacity building delivery as appropriate.

### The way forward (planned initiatives)
- Post revised FSI list on the IMF's external website together with this Board Paper and companion Background Paper.
- Inform Fund member countries of timeline for revising the FSICG and the FSI data and metadata reporting templates and their implementation.
- Develop and implement an outreach program to promote awareness and promote the revised FSICG as a benchmark for compiling and reporting FSI data and metadata to the IMF for public dissemination on the IMF's FSI website.

*Source: EXECUTIVE SUMMARY and selected excerpts, November 13, 2013.*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Purpose and consultations
- The Executive Board requested that the list of financial soundness indicators (FSIs) be kept under review to reflect evolving Fund surveillance priorities, the changing financial environment, and countries' capacity to compile FSIs.
- Purpose of the paper: inform Executive Directors on outcomes of STA consultations on revising the current FSI list in response to the global financial crisis and the Basel III Accord; the G-20 Data Gaps Initiative calls on the IMF to review the FSI list (Recommendation no. 2).
- STA conducted consultations in close collaboration with: a broad-based group of national and international experts (FSI Reference Group), international standard setting bodies, IMF departments, all FSI-reporting countries, and concerned international organizations.
- STA will keep the Executive Board informed periodically on developments, including work on revising the FSI Compilation Guide.

### Main changes to the FSI list
- Net change in indicators:
  - 19 new FSIs will be added to the list.
  - 5 FSIs will be dropped (mainly due to very limited reporting and comparability).
- Expanded coverage:
  - New indicators expand coverage of the financial sector, including money market funds (MMFs), insurance corporations (ICs), pension funds (PFs), other nonbank financial institutions (OFCs), non-financial corporations (NFCs), and households (HHs).
- Labeling change:
  - Change from “encouraged FSIs” to “additional FSIs” to avoid confusion with SDDS terminology.

### Rationale and guiding factors for revisions
- Key factors underpinning modifications:
  - Changes in regulatory concepts arising from the introduction of the Basel III Accord.
  - Need to maintain continuity of the existing set of core FSIs.
  - Enhancements to the SDDS and establishment of the SDDS Plus.
  - Need to develop new FSIs for OFCs recognizing sector heterogeneity and increasing importance.
  - Need to strengthen FSIs for NFCs and HHs to better monitor DT soundness.
  - Need to ensure countries can provide data without undue reporting burdens, focusing parsimoniously on analytically useful indicators.
  - Need to improve usefulness of FSIs for identifying and monitoring systemic risks by producing and disseminating concentration and distribution measures.

### Work program, outreach, and capacity building
- Timeline and activities noted:
  - STA convened FSIRG in November 2011 (representatives from 32 countries and 10 international and regional organizations attended).
  - STA prepared three position notes addressing: DTs (Position Note no. 1), OFCs (Position Note no. 2), and NFCs/HHs/markets/other issues (Position Note no. 3).
  - STA conducted training courses, seminars, and workshops to strengthen countries' capabilities to produce, analyze, and disseminate FSIs.
  - In April 2011, STA assumed responsibility for preparing an FSI Statistical Appendix associated with the Global Financial Stability Report (GFSR), consisting of six tables covering about 110 countries, published semi-annually.
- Coverage statistics:
  - As of July 31, 2013, 80 countries reported their FSIs (data and metadata) to STA on a regular basis for public dissemination on the IMF’s FSI website.
  - 69 out of the 80 FSI-reporting countries submit their data and metadata on a monthly or quarterly basis.
- SDDS/SDDS Plus:
  - The SDDS encourages subscribers to disseminate seven FSIs on a quarterly frequency.
  - The SDDS Plus requires adherents to disseminate seven FSIs on a quarterly basis.
  - While the SDDS encourages dissemination of “Net open position in foreign exchange to capital,” the SDDS Plus instead requires “Residential real estate prices.”

### Basel III implications for FSIs (capital and liquidity)
- Basel III context:
  - Basel III is to be fully implemented in 2019, with a phase-in period starting in 2013.
  - Basel III aims to address issues from the global financial crisis through more stringent capital requirements, new global liquidity standards, improved risk management and governance, and greater transparency and disclosure.
- Three main implications for existing capital-based FSIs:
  - Indicators that follow the Basel Committee on Banking Supervision capital adequacy definitions, measure the solvency of DTs, or assess vulnerabilities from credit and market risks must be calculated based on the Basel III definition of regulatory capital in countries that adopt Basel III.
  - The broader total regulatory capital (Tier 1 and Tier 2) rather than the narrower Tier 1 measure must be used for all solvency indicators with the exception of Tier 1 to risk-weighted assets (RWAs), and the regulatory leverage ratio, because national supervisors commonly use total regulatory capital as a capital measure for monitoring banks’ exposures and solvency.
  - The FSI list should include as core indicators the new capital-based ratios arising from Basel III innovations: the Common Equity Tier 1 (CET1) to RWAs and the Basel III leverage ratio. These ratios should become “active” in the FSI list when data start to become publicly available under the Basel III schedule.
- Basel III timing for FSI applicability:
  - New Basel III capital standard is in place from January 2013 onwards.
  - The new leverage ratio will be disclosed starting January 2015 and implemented in January 2018 after final calibration of the ratio.

### Enhancing forward-looking features: concentration and distribution measures
- Need: FSIs for the sector as a whole would be enhanced with concentration and distribution measures to improve usefulness and forward-looking features.
- STA plans to conduct a pilot exercise with a set of FSI-reporting countries on a voluntary basis to compile concentration and distribution measures.

### Other FSI-related issues addressed
- Consolidation basis: STA addressed consolidation basis to enhance comparability and homogeneity of FSIs across countries.
- Frequency of reporting and breaks in time series: addressed as part of comparability enhancements.
- Change of labeling from “Encouraged FSIs” to “Additional FSIs” to avoid confusion with SDDS terminology.
- Enhancing comparability and homogeneity of FSIs across countries will continue to be a critical task for staff.

*Source: EXECUTIVE SUMMARY, November 13, 2013.*

### 13.      As not all jurisdictions will introduce Basel III requirements across financial institutions

### 13.      As not all jurisdictions will introduce Basel III requirements across financial institutions

### Capital data aggregation and Basel transition
- Need to address data aggregation of capital components for countries implementing Basel III and Basel II (and/or Basel I) simultaneously.
- Recommended approach to derive capital data at the sectoral level for countries where deposit-takers implement Basel III simultaneously with Basel I and/or Basel II is the summation of Basel I and/or Basel II capital components with the corresponding Basel III.
- "This issue will be addressed more fully in the revision of the FSICG." (text statement)

### Changes to core FSIs for deposit-takers (DTs)
- Four new indicators for DTs will be added into the core set and one will be upgraded from the additional set to the core set.
- Three new FSIs linked to Basel III framework: CET1 to RWAs, liquidity coverage ratio (LCR), and net stable funding ratio (NSFR).
- Provisions to NPLs will be added to the core set because it is included in the FSIs tables of the GFSR.
- Capital to assets indicator will be revised to "Regulatory Tier 1 capital to assets" and upgraded to the core set because it is encouraged in the SDDS and required in the SDDS Plus.
- Footnote: "Currently, this indicator is included in the GFSR FSI tables prepared for about 110 countries."

### Core FSI for real estate markets
- Indicator I37, Residential Real Estate Prices (percentage change in the last 12 months), will be moved from the additional set to the core set.
- Countries are requested to provide information on national practices in their metadata for FSIs to promote cross-country comparability.

### Additional FSIs for DTs
- New additional FSI for DTs: credit growth to the private sector.
- Rationale: captures emerging systemic risks as excessive credit growth is viewed as an indicator of potential vulnerabilities and increased probability of a crisis event.

### Additional FSIs and subsector split for OFCs
- OFC sector will be split into four subsectors: (i) money market funds (MMFs); (ii) insurance corporations (ICs); (iii) pension funds (PFs); and (iv) other OFCs.
- FSIs for OFCs (sector as a whole) and subsectors will be included in the additional set of FSIs.
- No further split of OFC subsectors at this juncture due to limited data availability and comparability issues.

### Changes to existing OFC FSIs
- I26 – OFC assets as percent of total financial system assets: produced for the OFC sector as a whole and for each subsector: (i) MMFs; (ii) ICs; (iii) PFs; and (iv) other OFCs.
- I27 – OFC assets as percent of GDP: produced for the OFC sector as a whole and for each subsector: (i) MMFs; (ii) ICs; (iii) PFs; and (iv) other OFCs.

### Additional FSIs for MMFs
- New indicators for MMFs:
  - Sectoral distribution: assets distributed by debtor sector (central bank, DTs, OFCs, general government, NFCs, nonresidents).
  - Maturity distribution: asset maturity buckets: 1-30 days; 31-90 days; and more than 90 days.

### Additional FSIs for ICs
- New indicators for ICs:
  - Shareholders' equity to invested assets.
  - Total premium income minus premium ceded by primary insurers to total premium income.
  - Return on equity (ROE) and Return on assets (ROA).

### Additional FSIs for PFs
- New indicators for PFs:
  - Liquid assets to estimated pension payments in the next year.
  - ROA.

### Additional FSIs for NFCs
- Changes:
  - Total debt to equity ratio will include two supplementary ratios: external debt to equity and foreign currency debt to equity.
  - Net foreign exchange exposure to equity and number of bankruptcy proceedings initiated will be dropped.
  - Four new additional FSIs: (i) ROA, (ii) earnings to interest expenses, (iii) liquid assets to total assets, and (iv) NFC debt-to-GDP ratio.
- Methodology for compiling the new FSIs will be developed and included in the revised FSICG.

### Market liquidity indicators
- Existing market liquidity indicators I35 (Average bid-ask spread in the securities market) and I36 (Average daily turnover ratio in the securities market) will be dropped.
- Rationale: readily available from commercial sources at high frequency; cross-country comparability limited due to different compilation methods and coverage.

### Additional FSI for households (HHs)
- New additional FSI: HHs debt to gross disposable income.

### Consolidation basis
- Need to improve cross-country comparability by limiting options on consolidation basis.
- FSICG will retain two recommended consolidation bases for DTs: cross-border and cross-sector for all domestically incorporated (CBCSDI) and domestically controlled cross-border and cross-sector, along with a third option, domestic consolidation (DC), for countries with very few or no foreign branches or subsidiaries.
- Option of other consolidation bases will remain due to legal constraints in some countries.
- Consolidation basis guidance for subsectors:
  - OFC subsectors: follow basis used for current I26—"Assets to total financial system assets" (either cross-border or DC).
  - PFs: only DC applicable.
  - HHs: only DC applicable.
  - NFCs: either cross-border or DC depending on data availability and foreign activity.

### Frequency of reporting and breaks in time series
- Guidelines for reporting FSI data to the IMF:
  - Compilation of quarterly data is encouraged for all countries and all FSIs, in particular those on DTs, with a time lag of one quarter.
  - For FSIs on NFCs, HHs, and possibly OFCs, quarterly frequency is encouraged, but semi-annual and annual frequencies may be needed.
  - For semi-annual and annual data, reporting is expected with a time lag of one to two quarters.
- Countries facing difficulties compiling final data timely are encouraged to report preliminary data based on a sample, with preliminary nature indicated in metadata.
- Breaks in time series for supervisory-based indicators are unavoidable as a result of the implementation of Basel III.
- FSIRG pointed to need to manage time series breaks resulting from introduction of new Basel III concepts; instruments included and supervisory deductions will change affecting comparability.
- For non-supervisory-based indicators, countries will be encouraged to submit revised historical time series.

### Change of labeling: "Encouraged FSIs" to "Additional FSIs"
- Label change made to avoid confusion with term "encouraged" used in the SDDS.
- Revised list shows two sets: (i) "core FSIs"; and (ii) "additional FSIs."

### Developing concentration and distribution measures
- Need to augment FSIs for a sector as a whole with concentration and distribution measures to identify and monitor build-up of systemic risks.
- Proposed measures to augment FSIs:
  - Standard deviation.
  - Quintiles.
  - Deciles (especially the left or right 10-percent tail).
  - Minimum and maximum values, with indication whether associated institutions have a share above five percent of total assets of the banking (or OFC) sector.
  - A concentration index (i.e., Herfindahl index).
- FSIRG agreed these measures would significantly enhance usefulness of FSIs subject to confidentiality constraints.
- STA plans a pilot exercise on a voluntary basis with a set of FSI-reporting countries to assess feasibility of collecting and disseminating concentration and distribution measures for DTs and other selected FSIs (e.g., debt to equity for NFCs).
- Pilot outcomes and possibility of regular reporting to be discussed with FSIRG and FSI-reporting countries.

### The way forward
- Planned initiatives summarized:
  - Post revised FSI list on the IMF's external website together with this Board Paper and the companion Background Paper.
  - Inform Fund member countries of the timeline for revising the FSICG and the FSI data and metadata reporting templates and their implementation.
  - Develop and implement an outreach program to promote awareness of the revised list of FSIs and the methodology for compiling them, and promote the use of the revised FSICG as a benchmark for compiling and reporting FSI data and metadata to the IMF for public dissemination on the IMF's FSI website.

*Source: IMF PDF chapter titled "13.      As not all jurisdictions will introduce Basel III requirements across financial institutions"*

### 40.      The FSICG will be revised to reflect the revised FSIs list. STA will work in close

### MODIFICATIONS TO THE CURRENT FSI LIST

### Revisions to guidance and methodology
- The FSICG will be revised to reflect the revised FSIs list.
- STA will work in close collaboration with the FSIRG, international standard setting bodies and IMF’s departments to:
  - update the FSI methodology to reflect Basel III; and
  - develop the methodology for compiling newly introduced FSIs.
- All FSI-reporting countries will be consulted and kept informed throughout the process.
- The IMF’s FSI website will be updated, including revamping the FSI data and metadata reporting templates based on the revised list of FSIs and the revised FSICG.
- STA will continue to keep the Executive Board informed periodically on developments in the IMF’s FSIs initiative, including its work on revising the FSICG.

### Pilot exercise and forward-looking measures
- STA will conduct a pilot exercise on compiling concentration and distribution measures to better capture financial sector vulnerabilities and risks and improve the forward looking features of the FSIs. STA will:
  - invite all FSI reporting countries to participate on a voluntary basis;
  - carry out the pilot exercise; and
  - report back to the FSIRG.

### Capacity building and dissemination
- Capacity building efforts to strengthen countries’ capabilities to produce, analyze and disseminate FSIs will continue.
- STA will:
  - update materials for training courses on FSIs in a timely fashion;
  - continue capacity building activities, such as training courses, workshops and seminars, as well as technical assistance missions; and
  - seek donors funding to augment capacity building delivery as appropriate.

### Additions to and deletions from the current FSI list (summary)
- Core FSIs for Deposit takers: additions include
  - Common equity Tier 1 capital to risk-weighted assets [Solvency ratio]
  - Provisions to non-performing loans
  - Available amount of stable funding to required amount of stable funding [net Stable Funding Ratio]
- Additional FSIs for Deposit Takers: additions include
  - Credit growth to private sector
- Additional FSIs for Other Financial Corporations: additions include
  - OFC assets (percent of total financial system assets)
  - MMF assets (percent of total financial system assets)
  - IC assets (percent of total financial system assets)
  - PF assets (percent of total financial system assets)
  - Other OFC (percent of total financial system assets)
  - OFC assets (percent of GDP)
  - MMF assets percent of GDP)
  - IC assets (percent of GDP)
  - PF assets (percent of GDP)
  - Other OFC (percent of GDP)
- Additional FSI for Money Market Funds: additions include
  - Sectoral distribution of investments (percent of total investments) [Assets quality]
- Additional FSIs for Insurance Corporations: additions include
  - Shareholder equity to invested assets [Capital ICs]
  - Total premium income minus premium ceded by primary insurers to total premium income [Risk retention ratio ICs]
  - Return on assets [Earnings and profitability]
  - Return on equity [Earnings and profitability]
- Additional FSIs for Pension Funds: additions include
  - Liquid assets to estimated pension payments in the next year [liquidity ratio]
  - Return on assets [earnings and profitability]
- Additional FSIs for Nonfinancial corporations: additions include
  - Return on assets
  - Earnings to interest expenses
  - Liquid assets to total assets
  - NFC debt to GDP
- Additional FSIs for Households: additions include
  - Household debt to household disposable income
- Deletions listed (excerpt):
  - Core FSIs for Deposit takers: Net open position in equities to capital (deleted)
  - Additional FSIs for Nonfinancial corporations: Net foreign exchange exposure to equity (deleted)
  - Additional FSIs for Market Liquidity: Average bid-ask spread in the securities market; Average daily turnover ratio in the securities market (deleted)

### Appendix II — Revised FSI List (selected entries)
- CORE SET — Core FSIs for Deposit Takers (codes and items):
  - I01 Regulatory capital to risk-weighted assets
  - I02 Regulatory Tier 1 capital to risk-weighted assets
  - I03 (NEW) Common equity Tier 1 to risk-weighted assets [Solvency ratio]
  - I04 Capital to assets
  - I05 Non-performing loans net of provisions to capital
  - I06 Non-performing loans to total gross loans
  - I07 (NEW) Provisions to non-performing loans
  - I08 Sectoral distribution of loans to total loans
  - I09 Return on assets
  - I10 Return on equity
  - I11 Interest margin to gross income
  - I12 Noninterest expenses to gross income
  - I13 Liquid assets to total assets
  - I14 Liquid assets to short-term liabilities
  - I15 (NEW) Available amount of stable funding to required amount of stable funding  [Net stable funding ratio]
  - I16 Net open position in foreign exchange to capital
- CORE FSIs for Real Estate Markets:
  - I17 Residential real estate prices (Percentage change/last 12 months)
- ADDITIONAL SET — Additional FSIs for Deposit Takers:
  - I18 Large exposures to capital
  - I19 Geographical distribution of loans to total loans
  - I20 Gross asset position in financial derivatives to capital
  - I21 Gross liability position in financial derivatives to capital
  - I22 Trading income to total income
  - I23 Personnel expenses to noninterest expenses
  - I24 Spread between reference lending and deposit rates (base points)
  - I25 Spread between highest and lowest interbank rates (base points)
  - I26 Customer deposits to total (non-interbank) loans
  - I27 Foreign-currency-denominated loans to total loans
  - I28 Foreign-currency-denominated liabilities to total liabilities
  - I29 (NEW) Credit growth to private sector
- ADDITIONAL FSIs for Other Financial Corporations (OFCs):
  - I30 (NEW) OFC assets (percent of total financial system assets)
    - MMF assets (percent of total financial system assets)
    - IC assets (percent of total financial system assets)
    - PF assets (percent of total financial system assets)
    - Other OFC assets (percent of total financial system assets)
  - I31 (NEW) OFC assets (percent of GDP)
    - MMF assets (percent of GDP)
    - IC assets (percent of GDP)
    - PF assets (percent of GDP)
    - Other OFC assets (percent of GDP)
- ADDITIONAL FSIs for Money Market Funds (MMFs):
  - I32 (NEW) Sectoral distribution of investments (percent of total investments) [Assets quality]
    - Central bank
    - Deposit takers
    - Other financial corporations
    - General government
    - Nonfinancial corporations
    - Non residents
  - I33 (NEW) Maturity distribution of investments (percent of total investments) [Liquidity]
    - 1-30 days
    - 31-90 days
    - >90 days
- ADDITIONAL FSIs for Insurance Corporations (ICs):
  - I34 (NEW) Shareholder equity to invested assets [Capital ICs]
  - I35 (NEW) Total premium income minus premium ceded by primary insurers to total premium income [Risk retention ratio ICs]
  - I36 (NEW) Return on assets [Earnings and profitability]
  - I37 (NEW) Return on equity [Earnings and profitability]
- ADDITIONAL FSIs for Pension Funds (PFs):
  - I38 (NEW) Liquid assets to estimated pension payments in the next year [Liquidity ratio]
  - I39 (NEW) Return on assets [Earnings and profitability]
- ADDITIONAL FSIs for Non-financial Corporations (NFCs):
  - I40 Total debt to equity
    - external debt to equity
    - foreign currency debt to equity
  - I41 (NEW) Return on assets
  - I42 Return on equity
  - I43 Earnings to interest and principal expenses
  - I44 (NEW) Earnings to interest expenses
  - I45 (NEW) Liquid assets to total assets
  - I46 (NEW) NFC debt to GDP
- ADDITIONAL FSIs for Households (HHs):
  - I47 Household debt to GDP
  - I48 Household debt service and principal payments to income
  - I49 (NEW) Household debt to household disposable income
- ADDITIONAL FSIs for Real Estate Markets:
  - I50 Commercial real estate prices (Percentage change/last 12 months)
  - I51 Residential real estate loans to total gross loans
  - I52 Commercial real estate loans to total gross loans

*International Monetary Fund, excerpt from "MODIFICATIONS TO THE CURRENT FSI LIST"*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/np/pp/eng/2013/_111313.pdf_