Senior officials from G-20 countries gathered in Washington to discuss most challenging data gaps recommendations (photo: Richard B. Levine/Newscom)
IMF-FSB Statistics Conference
Senior officials from all G-20 members and representatives of international institutions met during March 30-31, 2011 in Washington, D.C. to review ongoing work and set clear guidelines on data priorities going forward. The conference was organized by the IMF and the Financial Stability Board (FSB) Secretariat.
“One of the key lessons that we learned from this sobering crisis was the demonstration of the extent of cross-border interconnectedness across institutions, instruments, and markets along with an appreciation of the risks of incoherent and inconsistent economic and financial policies,” said IMF First Deputy Managing Director John Lipsky in his opening remarks.
Lipsky: A key lesson from the crisis was extent of cross-border connections across institutions (IMF photo)
As a result, the G-20 asked the IMF and the FSB in early 2009 to explore data gaps and provide proposals to address them. This request was endorsed by the IMF’s policy steering committee—the International Monetary and Financial Committee.
In November 2009, 20 recommendations to address these gaps were identified, with initial progress reported in June 2010. Between fall 2010 and spring 2011, IMF staff visited and consulted with G-20 country authorities around the globe to discuss the recommendations with them. This conference was part of the consultation process with G-20 economies on the strategies for implementing the work plans and timetables leading to the next progress report to the G-20, expected to be delivered in June 2011.
Burgi-Schmelz: Through events like this, the IMF can contribute to informed decision-making in major policy areas (IMF photo)
“I believe events like this—bringing together senior officials and representatives of international institutions for a focused discussion—are one of the most effective ways in which the Fund can contribute to informed decision-making in major areas of economic policy,” noted Adelheid Burgi-Schmelz, Director of the IMF’s Statistics Department.
Most challenging recommendations
To date, significant progress has been made to close identified data gaps and to strengthen data. For example, in April 2009, the Principal Global Indicators (PGI) website for G-20 economies was launched to provide timely data available from participating international agencies covering financial, governmental, external, and real sector data. The website has already been enhanced several times and on March 29, 2011, the PGI’s coverage was expanded to include the 5 members of the FSB that are not part of the G-20 (Hong Kong SAR, the Netherlands, Singapore, Spain, and Switzerland), but that handle significant volume of financial transactions, particularly on global systemically important financial institutions.
Leone: Most challenging recommendations are among the most important for improving financial stability (IMF photo)
But some of the most challenging recommendations are also among the most important for improving financial stability and policy decision making, observed Alfredo Leone, Deputy Director of the IMF’s Statistics Department. Nigel Jenkinson, FSB Adviser, stressed that additional resilience needs to be built into the financial system to address uncertain shocks, whatever the source.
Participants highlighted four key areas useful for measuring and understanding the risks to the international system:
• Capturing the build-up of risk in the financial sector. This calls for improving data on the build-up of leverage and maturity mismatches of global systemically important financial institutions, as well as nonbank financial institutions (the so-called shadow banks).
Jenkinson: Additional resilience needs to be built into the financial system to address uncertain shocks (IMF photo)
• Improving data on financial network connections. This calls for developing analytical tools to more accurately understand financial interconnections and the build-up of systemic risk concentrations of systemically important banks and nonbank financial institutions.
• Strengthening data on government operations. There is a lot of data on the government sector but these are not always comparable across countries, so harmonization remains a key challenge.
• Monitoring the vulnerability of domestic economies to shocks. More information is needed on how income, consumption, and wealth are distributed within sectors.
Links with other initiatives
Conference participants also stressed the need to link the G-20 data gaps work with other G-20 policy initiatives.
The IMF, for its part, has taken various steps to strengthen policy collaboration. For instance, under the G-20-led Mutual Assessment Process, key indicators to evaluate external and internal imbalances are being developed, with input from IMF staff. Ensuring that the data used to calculate them are correct and consistent is therefore essential.
The IMF has also launched “spillover reports” for the five largest economies (the United States, Japan, China, the United Kingdom, and the Euro area). These reports will contain a basic analysis of the architecture of the intersectoral linkages, followed by an assessment of the positive and negative spillovers between these systemically important countries and their neighbors.
And, in September 2010, the IMF’s Financial Sector Assessment Program became mandatory for 25 countries with systemically important financial sectors.
Moving forward
Conference participants recognized that closing all the gaps will take time and resources, and will require coordination at the international level. Flexibility and prioritization in the timetable of implementation will be needed to account for countries’ level of statistical development and resource constraints. They also noted that there are legal constraints regarding data access that need to be addressed.
“There is a need to find practical ways to alleviate compliance burdens on reporting entities while gathering the data required by national and international authorities to do their job effectively,” stressed Lipsky. “In the midst of tightening budget envelopes, adequate resources will need to be identified and allocated to statistical work at the country level as well as internationally.”
