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The Balance Sheet Approach:
Data Needs, Data at Hand, and Data Gaps
Alfredo M. Leone
Deputy Director
Statistics Department
International Statistical Conference "Statistics - Investment in the Future 2"
Prague, Czech Republic
September 14-15, 2009
Disclaimer
The views expressed are those of the
author and should not be attributed to
the International Monetary Fund, its
Executive Board, or its Management.
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The Balance Sheet Approach


Focus of Analysis
 Stocks of assets and liabilities
 System of interlinked sectoral balance sheets
Main Applications at the IMF
 Surveillance work
 Crisis management
 Design of IMF-supported programs
 Financial stability analysis
 Vulnerability analysis
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The Balance Sheet Approach:
Analysis of Key Mismatches



Maturity mismatches
 Rollover risk
 Interest rate risk
Currency mismatches
 Exchange rate risk
Capital structure mismatches
 Debt rather than equity risks
 Mismatches can lead to:
 Liquidity problems
 Solvency problems
 Spillover effects
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Balance Sheet Approach: Key
Indicators of a Sector’s Vulnerability



Net financial position:
financial assets – financial liabilities
Net foreign currency position:
foreign currency assets – foreign currency liabilities
Net short-term position:
short-term assets – short-term liabilities
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Intersectoral Financial Asset and Liability Position Matrix
Creditor
Debtor
Central
Bank
I. Central Bank
Total Liabilities
Short-term
Domestic Curr
Foreign Curr
M-& Long-term
Domestic Curr
Foreign Curr
Equity
General
Government
Other Dep.
Corporations
Non-financial
Corporations
Other
Residents
Nonresidents
SRF
SRF
SRF
SRF
SRF
SRF
Central Bank
Liabilities
Central Bank
Liabilities
Central Bank
Liabilities
Central Bank
Liabilities
Central Bank
Liabilities
Central Bank
Liabilities
IIP
CPIS
N/A
Off-Balance
Sheet Items
II. General Gov.
Other Finan.
Corporations
SRF: Central
Bank Assets
SRF: ODCs
Assets
III. Other Dep.
Corporations
(ODCs)
SRF: Central
Bank Assets
SRF: ODCs
Liabilities
IV. Other Finan.
Corporations
(OFCs)
SRF: Central
Bank Assets
SRF: OFCs Liab.
V. Nonfinancial
Corporations
(NFs)
SRF: Central
Bank Asset
VI. Other
Residents
SRF : Central
Bank Assets
Nonresidents
SRF: Central
Bank Assets
IIP/CPIS
Limited country
coverage
Incomplete
Incomplete
IIP
CPIS
SRF: OFCs Assets
Limited country
coverage
SRF: ODCs
Liabilities
SRF: OFCs
Liabilities
Incomplete
SRF: OFCs Assets
Limited country
coverage
SRF: ODCs
Assets
SRF: OFCs Assets
SRF: ODCs
Assets
IIP
CPIS
SRF: OFCs Assets
IIP/CPIS
IIP
QEDS
SRF: ODCs
Liabilities
SRF: ODCs
Liabilities
SRF: ODCs
Liabilities
IIP/QEDS
SRF: OFCs Liab
SRF: OFCs Liab
SRF: OFCs
Liabilities
IIP/QEDS
Limited country
coverage
SRF: ODCs
Assets
Incomplete
Limited country
coverage
N/A
IIP
CPIS
N/A
Limited country
coverage
IIP
CPIS
IIP
QEDS
JEDH
IIP
CPIS
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Data at Hand








IMF Monetary and Financial Statistics (MFS):
Standardized Report Forms (SRFs)
BIS International Banking Statistics
IMF Balance of Payments and International
Investment Position (BOP/IIP)
World Bank/IMF Quarterly External Debt Statistics
(QEDS)
BIS/IMF/OECD/World Bank Joint External Debt
Hub (JEDH)
IMF Reserves Template
IMF Coordinated Portfolio Investment Survey
(CPIS)
IMF Government Finance Statistics (GFS)
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Data Gaps



Timeliness (reporting/disseminating lags)
Frequency (low periodicity of data)
Coverage
 Country coverage
 Off-balance sheet positions and special purpose
vehicles (ultimate risk)
 Shadow financial system
 Exposures to complex structured products (credit
risk transfer)
 Cross-border counterparty exposures
 Definition/coverage of government sector
 Nonfinancial corporate and households sectors
 Remaining maturity of outstanding liabilities
 Nonfinancial assets (housing-related data)
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New Initiatives (1)

Addressing data gaps:
 Establishment of the Inter-Agency Group on
Economic and Financial Statistics, IAG (2008)
 BIS, ECB, Eurostat, IMF (Chair), OECD, UN, WB
 Coordinate work to explore data gaps and strengthen
data collection
 G-20 Working Group on Reinforcing International
Cooperation and Promoting Integrity in Financial Markets
 Asked the IMF and the Financial Stability Board (FSB)
to explore gaps and provide proposals to address them
to the next meeting of G-20 Finance Ministers and
Central Bank Governors (late 2009)
 IMFC (IMF Governing Body) welcomed the work of the
IMF and FSB to provide better indicators of systemic risks
and address data gaps
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New Initiatives (2)

Improving communication of official statistics
 IAG launched common public online website
(April 2009): the Principal Global
Indicators which displays for G-20
economies:
 Predetermined tables of statistics
 Cross-country datasets
 Links to national websites of central banks,
regulatory agencies, and statistical offices
 Links to the SDDS National Summary page
 Links to websites of the IAG agencies
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New Initiatives (3)

Initiatives at the IMF
 Further implementation of SRFs to enhance the BSA
 Regular compilation and dissemination of Financial
Soundness Indicators, a complement to the BSA in
enhancing vulnerability and financial stability analysis
 Development of a conceptual framework for the
compilation and presentation of debt securities (issuance
and holdings) with the BIS, ECB, and the WB (Working
Group on Securities Databases)
 Promotion of high-frequency (quarterly) general
government sector data on a harmonized basis
 Development of Public Sector Debt Guide for the
collection and dissemination of public sector debt
statistics.
 Coordinated Direct Investment Survey (direct investment
positions with equity reported separately from debt
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investment)
Concluding Remarks:
Challenges Ahead

Five key areas:
 Sectoral balance sheet data
 Improving availability, timeliness, frequency, and
coverage of assets and liabilities
 Public sector
 Accounting for government intervention in response to
the crisis (including contingent liabilities)
 Ultimate risk and credit risk transfer
 Capturing assets and liabilities of special purpose
entities and off-balance sheet positions
 Housing markets
 Improving availability of housing-related data and
making data cross-country comparable
 Macroprudential risks
 Improving indicators of financial soundness, including
measures of leverage and liquidity.
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