Financial Soundness Indicators: Recent Developments and Plans

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Financial Soundness Indicators Recent
Developments and Plans
OECD Working Party on Financial
Statistics Paris, October 24-27, 2011

• Manik Shrestha
• IMF Statistics Department

The views expressed herein are those of the
author and should not be attributed to the IMF,
its Executive Board, or its management.
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Background on FSI Work

• IMF started to work on developing Financial
  Soundness Indicators (FSIs) together with
  international community in early 2000
• A draft compilation guide was prepared in 2004
• Final version published in 2006
• Amendments to guide were introduced in 2007 to
  enhance international comparability, particularly
  for consolidation rules and the use of Basel
  principles and IFRS for compiling underlying data
  series
• IMF launched online database of FSIs in July 2009
  (http//fsi.imf.org/)
• Includes data underlying FSIs, where available

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Scope of FSIs

• A list of 40 FSIs (approved by the IMFs
  Executive Board)
• 25 for deposit-takers (12 core and 13 encouraged
  FSIs)
• 2 for other financial corporations (encouraged)
• 5 for non-financial corporations (encouraged)
• 2 for households (encouraged)
• 2 for market liquidity (encouraged)
• 4 for real estate markets (encouraged)
• See Annex for a complete list and reporting status

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FSIs Recent Developments

• FSIs for inclusion in the SDDS
• Approval in March 2010 by the IMF Board to
  include 7 FSIs as a new data category in SDDS on
  an encouraged basis
• Technical work is underway to make these FSIs
  available through the SDDS
• One FSI not in the list of original 40
• FSIs in the IMFs Global Financial Stability
  Report (GFSR) to be integrated into the FSI
  project
• GFSR FSIs will become by-product of overall IMF
  FSI Project
• Collection and preparation of FSIs for inclusion
  in GFSR starting with the April 2011 issue
• Work focused on non-FSI reporters included in
  GFSR
• Work with current FSI reporters to obtain time
  series data
• One FSI not in the list of original 40
• SDDS Plus has a proposal to
• Include almost all FSIs encouraged in the SDDS as
  required in the SDDS Plus
• Add two real estate prices to the list of
  required data in the SDDS Plus

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FSI Reference Group (FSIRG) Meeting

• FSIRG meeting is scheduled to take place during
  November 15-16, 2011 at IMF Headquarters
• An Issues Paper was circulated in July 2011 that
  identifies issues for discussion
• FSIs for deposit takers
• Impact of the BASEL III Accord on the scope and
  definition of FSIs
• FSIs for other financial corporations
• Scope of FSIs, sectoral breakdown of OFCs, large
  non-bank financial institutions, etc.
• FSIs for non-financial corporations, households,
  and real estate markets
• Scope or refinement of FSIs for non-financial
  corporations
• Scope or refinement of FSIs for households
• Expanding the reporting of real estate prices
• Improving the frequency and timeliness of FSIs
• Higher frequency, at least quarterly timeliness
  to be reduced to 8-16 weeks?
• Underlying profit and loss accounts and balance
  sheets
• Improving the cross-country comparability
• Consolidation basis and other issues for better
  standardization

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FSIs Concerning Households

• I33 Household debt to GDP (encouraged)
• The data for household debt comprise debt
  incurred by resident households of the economy.
  This FSI measures the overall level of household
  indebtedness (commonly related to consumer loans
  and mortgages) as a share of GDP.
• I34 Household debt service and principal payments
  to income (encouraged)
• This FSI is calculated by using household debt
  service payments as the numerator and gross
  disposable income over the same period as the
  denominator. It measures the capacity of
  households to cover their debt payments (interest
  and principal).
• http//fsi.imf.org/ has data entries (quarterly
  and/or annual) from (at least) 2010 Q1 for only
  22 and 8 respectively for the above indicators of
  the 65 countries on the database. Many not up to
  date.
• I37 Residential real estate price index
  (encouraged)
• See next slide

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Residential Property Prices Indexes

• A difficult area
• Only a sub-set of properties are transacted each
  period. Not comparing prices of like with like.
• Data sources for weights and prices differ
  between countries depending on legal registration
  and financing arrangements. Sources include land
  registry, lenders, realtors.
• Progress on methods Handbook on Residential
  Property Prices Indexes, version 4, May 2011 on
  http//epp.eurostat.ec.europa.eu/portal/page/porta
  l/hicp/methodology/owner_occupied_housing_hpi/rppi
  _handbook
• Essentially complete aim is to facilitate the
  setting-up/improvement of residential property
  prices.
• Focus is on methods of quality-mix adjustment
  also includes a conceptual issues, uses, methods
  used, and empirical examples.
• Progress on implementation Eurostat initiative
  to develop harmonized RPPIs. Experimental results
  available for owner-occupied housing (OOH) in the
  framework of the Harmonized Indexes of Consumer
  Prices (HICP) for countries in the euro area and
  at the European Union level.
• Progress on dissemination BIS database
  http//www.bis.org/statistics/pp.htm
• Currently includes data from 43 countries at
  different frequencies. Data differ significantly
  from country to country in terms of type of
  property, area covered, vintage, priced unit, and
  compilation methods.
• Country RPPIs included are in some cases a
  selection of those available.

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Other Data Initiatives Related to Households

• Income, consumption, and wealth of households
• The Inter Agency Group (IAG) on Economic and
  Financial Statistics (BIS, Eurostat, ECB, IMF,
  OECD, UN, and World Bank) is promoting the
  production and dissemination of sectoral
  macroeconomic accounts, including those for the
  household and nonprofit institutions sector.
• Financial interconnectedness of household with
  the other economic sectors (including the rest of
  the world)
• The IAG is promoting the development of
  from-whom-to-whom breakdowns of the sectoral
  macroeconomic accounts for financial positions
  and flows within the context of the sectoral
  accounts work.
• Distributional aspects and micro-macro link
• OECD and Eurostat task forces will develop the
  methodology for matching micro data with national
  accounts. Once methodologies are in place,
  periodic monitoring of the distribution of
  household economic resources (income,
  consumption, and wealth) within the System of
  National Accounts could be envisaged. This might
  extend to household debt, given its importance to
  the identification of vulnerabilities developing
  in the domestic economy.

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GFSR IMFs Global Financial Stability Report