Lucie Laliberté Statistics Department International Monetary Fund Update on the IMF’s work on Financial Soundness Indicators OECD Working Party on Financial Statistics, Paris October, 2003 At last year’s meeting of the OECD Working Party on Financial Statistics, Mr. Robert Heath provided an update on the IMF’s work on Financial Soundness Indicators (FSIs). At that time, the first draft of the Compilation Guide on Financial Soundness Indicators was being prepared. This short presentation provides an update on the key developments that have occurred since then, and highlights upcoming activities of the Fund’s Statistics Department on FSIs. [next slide] Lucie Laliberté Statistics Department International Monetary Fund

Overview of Key Developments The main developments since the last update provided in 2002 are as follows: Public comment period (March-July 2003) on the draft Compilation Guide on FSIs is now over; a revised draft is being prepared for an Expert Meeting (see ahead). In June 2003, the IMF Executive Board discussed progress on the work program for FSIs, and the Guide in particular. A program of regional outreach seminars on FSIs has begun. There have been three main developments in the past year: Public comment period: In March 2003, the draft Guide was posted on the IMF’s website with a request for public comments through July 18, 2003. A call for public comments was also issued to central banks, ministries of finance, bank supervisory agencies, and statistical agencies of IMF-member countries, as well as to academics, financial market participants, and other interested users in the private sector. IMF Executive Board Meeting: the Board expressed satisfaction with the progress on the Guide and ongoing work at the Fund on the analytical use of FSIs, particularly in the context of the IMF and World Bank Financial Sector Soundness Assessments. Regional outreach seminars: the week long seminars are aimed at senior- to mid level country officials involved in financial stability issues, and include presentations by the BIS and regional organizations. [next slide]

Overview of Key Developments (continued) Looking ahead, A second Expert Group Meeting will take place at IMF headquarters at end-October 2003 to discuss the revised draft of the Guide. The IMF and BIS are jointly hosting a conference on Real Estate Indicators and Financial Stability at IMF headquarters earlier in the same week as the Expert Group Meeting. Looking ahead, two back-to-back meetings are scheduled to take place in Washington D.C. at the end of October: Second Expert Group Meeting: This meeting is to discuss the key issues arising from the comments received before the Guide is finalized and provided to the IMF Executive Board for their endorsement on a lapse of time basis. The first Expert Group Meeting took place in September 2002 and reviewed and endorsed the general approach taken in the Guide. Real Estate Conference: This is a new initiative for the IMF’s Statistics Department. While real estate price indices have for some time been identified by policy makers as important for economic and financial analysis, the work on FSIs has highlighted the lack of, but need for, reliable data on real estate prices. The remaining slides elaborate on these key developments. [next slide]

Public Comments on the Guide There has been a satisfactory response rate to the request for comments. Reaction to the Guide has been positive. There has been general recognition of a need for a flexible approach to implementing the Guide. There has been a general call for more in the Guide on the analysis of FSIs. The Expert Group Meeting in October 2003 will consider a revised draft of the Guide in the light of the comments received. Response rate to request for comments: 38 written comments were received on the Guide. Responses were received from developed, emerging, and developing economies. The institutional representation was also good with responses received from central banks, national statistical offices, supervisory agencies, a ministry of finance, the private sector and an academic institution. Reaction to the Guide has been positive: The development of international guidance on FSIs has been welcomed in the comments, and the concepts and definitions developed in the Guide have found general support. Flexible approach: While there has been general support for the concepts developed in the Guide, some commentators noted the costs involved with its implementation. A flexible approach was suggested by many commentators so that available data might be used, with harmonization toward international best practice a medium-term objective. Analysis of FSIs: The next draft of Guide will include an overview of the use of FSIs in macroprudential analysis. Expert Group Meeting: the experts will consider the revised draft of the Guide. [next slide]

IMF Executive Board discussion of the Guide IMF Executive Board broadly endorsed the Guide’s conceptual framework. After the finalization of the Guide (expected in the early months of 2004), Directors supported the idea that the Fund should conduct, with the other international agencies, a coordinated compilation exercise for FSIs. IMF Executive Board Meeting: The Board broadly endorsed the Guide’s conceptual framework. Directors considered that the Guide represents a “milestone” in establishing a standard reference in this new area of statistics. They were particularly supportive of the need for metadata (information about data) to accompany the dissemination of FSIs. The Board also encouraged continued collaboration with regional and other international agencies. A summary of the Board’s discussion is available from the IMF website. Coordinated Compilation Exercise: We envisage the participation of around 60 countries in the exercise given resource constraints. The aim of the exercise is to encourage countries to compile at least a core set of FSIs on a continuing basis. The Modalities and terms of reference for the exercise will be discussed during the Expert Group Meeting in October 2003. [next slide]

Regional Outreach Seminars Objectives are to: promote awareness of the IMF’s work on FSIs listen to views of country experts Schedule of seminars: Europe: Vienna (April 2003) and Frankfurt (April 2003) [Completed] Central and South America: Brazil (October 2003) Africa: Tunis (November 2003) Middle East: Abu Dhabi (April 2004) Asia: Singapore (July 2004) Objectives [refer to slide]: An important aspect of the seminars are country presentations on the types of analytical and statistical work being carried out in each country on financial system stability. Schedule [refer to slide]: By mid-2004, FSI seminars will have been conducted in the most regions of the world. [next slide]

Second Expert Group Meeting on FSIs (October 29-30, 2003) The Experts represent: Regional and international organizations Member countries of the IMF (experts nominated by IMF Executive Directors) The main purpose of the meeting is to: Review the text of the Guide given the comments received. Discuss the terms of reference and modalities for conducting the coordinated compilation exercise. The Experts [refer to slide]: A broad and balanced representation has been sought for the Expert Group so that the Guide benefits from diverse country experience and expertise. The OECD was represented by Mr. Chris Wright and Mr. Jens Verner Andersen at the first Expert Group Meeting in 2002. Ms. Michele Chavoix-Mannato has been invited to attend the forthcoming Expert Group Meeting. Purpose [refer to slide]: While the main focus will be on agreeing the text of the Guide, the Expert Group will also be consulted on the modalities and terms of reference for the coordinated compilation exercise. [next slide]

Joint IMF-BIS Conference on Real Estate Indicators and Financial Stability (October 27-28, 2003) Objectives of the conference are to: Promote development of reliable, timely and consistent statistics on real estate prices in the context of the work on FSIs Raise awareness of the requirements for adequate real estate statistics in support of policy initiatives to promote monetary and financial stability Share country experiences in efforts to improve the collection, compilation, and analysis of real estate prices Elucidate particular methodological questions and to identify issues that may merit further attention Discuss avenues for future development of national and international programs to compile and disseminate real estate price information Objectives [refer to slide]: The conference has an ambitious agenda, covering country experiences, the usefulness of available statistics, methodological and analytical issues, and avenues for future work. The conference represents a new area of work for the IMF’s Statistics Department, and one which poses particular difficulties for statisticians, not least because of the heterogeneity of real estate and regional disparities in real estate prices. Guest speakers/presenters The conference has attracted papers from experts at central banks, statistical agencies, the private sector, and academia. --------------------------------------------------------------------------------------------------- In summary, The preparation of the Guide is entering its final phase; The IMF’s work on FSIs will become more operational in the coming year, aimed at encouraging country compilation; and The conference on real estate indicators will deepen understanding of the challenges compilers face in putting together an aggregate measure of real estate prices, and identify avenues for future work. [end of presentation].