Responding to the Financial Crisis

Responding to the Financial Crisis Adelheid Burgi-Schmelz Director, IMF Statistics Department

Overview • The financial crisis that started in advanced economies is spreading to emerging markets and low-income countries. • This is reflected in lending by the IMF to member countries; a year ago lending was depressed, in recent months it has now bounced back strongly.

Overview • To further emphasize the severity of the situation, the IMF recently concluded an agreement with Japan to borrow $100 billion, • to boost the funds available for lending to member countries, • given the potential scale of borrowing the Fund is anticipating as the crisis spreads.

Overview • Many aspects of the crisis story were available in the official statistics: • increasing assets to capital ratios of financial institutions • imbalances in current accounts • fiscal deficits, and • financial cross-border positions for industrial countries growing significantly faster than real activity. • The financial crisis is not the result of a lack of proper macroeconomic statistics.

Overview • Indeed, the emergence over the past several years of a consistent economic statistics system and the data transparency initiatives, such as the IMF’s Special Data Dissemination Standard, remain highly relevant. • However, as we see the recent financial crisis spread to the real economy and across borders this is not the time to be complacent about economic and financial statistics. • What can we do to help?

Policy needs for Data • One conclusion we have reached is that the recent events underline the importance to go beyond traditional statistical production approaches to obtain • a set of timely and higher-frequency economic and financial indicators, at least for systemically important countries in more innovative ways. • Indeed, the speed at which the crisis developed highlighted the need for indicators that could support early warning efforts.

Policy needs for Data • This entails, among other things, • a new perspective in assessing the trade-off between timeliness and completeness, and • a new look at the traditional statistical production model to meet the needs of today’s world. • In short, we need to ensure the continued relevance of economic and financial statistics • in timeliness and frequency, and • in the evolution from first estimates to solid statistics.

Interagency group on economic and financial statistics • Also, despite the robust nature of the economic statistical system, the crisis has highlighted the need to address certain data gaps. • Against this background, international agencies closely involved in economic and financial statistics have come together to establish the Interagency Group on Economic and Financial Statistics, • under the chair of the IMF, with the BIS, ECB, Eurostat, OECD, the UN, and the World Bank.

Interagency group on economic and financial statistics • The group met for the first time on Friday, following two teleconferences. • In many of these fields, work is already progressing and we want to ensure that there is not duplication of efforts at the international level • But to strengthen data availability the group agreed on two priority areas:

Interagency group on economic and financial statistics • First, the group agreed to set up a public on-line website that • displays a set of economic and financial indicators for a group of systemic countries, • with links to relevant websites, including the agencies on the group. • The intention is that each agency would contribute data to the website. • The intention is to initially launch the website in the next 4-8 weeks with available information. • The website will expand over time

Interagency group on economic and financial statistics • The development will draw on the IMF experience with its newly created internal Data Link. • The Data Link: • focus on systemically important countries and provides cross country comparisons; • make a wide range of data sources available to users; and • include information that is much more timely and frequent

Indicative

Interagency group on economic and financial statistics • In developing this site it has become evident that not all data are as up-to-date as we would hope • even for major economies. • Also, in the area of fiscal statistics in particular the idea of providing consistent and comparable data across countries has been a challenge.

Interagency group on economic and financial statistics • Second, the group is identifying gaps in the available economic and financial datasets. • For instance: • The financial sector has a central role in the crisis, and there is a need to enhance data availability, • not least for those segments of the financial sector where the reporting of data is not well established.

Interagency group on economic and financial statistics • Balance sheet dataof the other sectors, particularly the nonfinancial corporates and household sectors. • The importance of sectoral balance sheets has been highlighted by the crisis: • The impact of house prices on household net worth has been highly relevant to the current crisis, but country practice in compiling these data is uneven. • And issues relating the ultimate risk/credit transfer instruments

Interagency group on economic and financial statistics • Looking forward, in the near term the group is to: • develop an inventory of gaps, • identify whether an existing group is investigating, or not, and • agree a way forward. • But of course, we all face strong pressures of work in response to the crisis.

Conclusions • The financial crisis is not the result of a lack of proper macroeconomic statistics. • However, it is vital at this critical time that economic statisticians are attuned to the legitimate data needs of policy makers. • And to develop a work program to fill the data gaps that the crisis has revealed. • We look forward to the support of national authorities as we progress on this work.

Responding to the Financial Crisis