Financial Databases – OECD and IMF

Presentation to the OECD Working Party on Financial Statistics Patrick O’Hagan October 2nd, 2007

Financial databases Demand for financial information is expanding, in line

with increasingly complex and inter-related economies … Policy-making, financial soundness assessments, macro-economic analysis, financial market/sector analysis, as well as economic research

National statistical organizations and international bodies have responded, and continue to respond, to these needs

International organizations have constructed (from member countries data) more than one type of DB for specific uses … but these DB are closely related in some respects

As IFDB expand, it may be useful to also plan for increased harmonization among them. This raises the question of whether there would be benefits of increased co-ordination and harmonization

Snapshot of select related international financial databasesOECD DATABASES

IMF DATABASES

Financial Account and Balance Sheet Account

Monetary and Financial Statistics

Institutional Investors

Bank Profitability

Financial Soundness Indicators

Economic Outlook – Government debt to GDP

World Economic Outlook – Government Debt to GDP

Select OECD Financial databases OECD has a long-standing history in collecting and

releasing financial statistics … The financial account and the balance sheet account are SNA93-based and have always covered all sectors and an aggregate level of detail for most financial instruments … some pilot projects to expand the level of instrument detail

Since mid-1990s and in recognition of the increasingly important role of institutional investors, the OECD also has been compiling and releasing balance sheet data and related indicators on these institutions

OECD also has a long history of compiling data on bank income statements and balance sheets, including a series of associated financial indicators

Among other current indicators, government sector financial data are also published in OECD Economic Outlook …major indicator is government debt-to-GDP

Select IMF Financial databases IMF has recently re-vamped its monetary statistics

program in conjunction with the new Monetary and Financial Statistics Manual (MFSM). The institutional sector and financial instrument details follow SNA93 (harmonized with SNA93) but, in some instances, request more depth (two-whom from whom) or modified concepts (w/r to consolidation)

IMF has recently added Financial Soundness Indicators (FSI). FSI cover sector data as well as related financial market indicators. FSI focus mainly on deposit-taking and lending institutions (the core set). Details on an aggregate for financial corporations, non-financial corporations and households are also requested (encouraged set)

IMF also publishes a limited amount of SNA-based government indicators, including Debt-to-GDP in the IMF World Economic Outlook.

Links between IFDB Linked to each other ─ partly in structure and

concepts, partly in uses. However, they are all closely related in one key regard: All are fundamentally drawn from the same source data in each of the countries

For corporations ─ the broad sector common to OECD financial statistics and to IMF MFS and FSI ─ the source is survey and administrative data compiled by the statistical agencies (which could be central banks) in the respective countries and organized by industry and by institutional sectors in the national accounts

Common starting point with respect to country source data can allow for improved harmonization of the information in international financial databases … as a means to reduce country response burden … and, more importantly, it better serve the needs of users

Country response burden The financial accounts at the OECD are closely related

to the IMF MFS; and, the OECD Bank Profitability data (and proposed changes) tie in to the detail in the IMF FSI initiative. Increased harmonization has the potential to allow for dual data submissions from member countries

E.G: Many countries produce financial instrument breakdowns in greater detail than required by OECD SNA93 based financial accounts, including a degree of counterpart information. This additional instrument detail is required by the IMF MFS for financial institutions

Envisage joint submissions of detailed financial statistics …where the OECD would select all sectors and aggregate instrument details and the IMF would select specific sectors and sub-instrument details

User needs and issues Countries’ financial databases have evolved based on

policy-analytic needs … some harmonization of these databases in recent years with the concerted move towards international standards which has, in turn, benefited the OECD and IMF efforts.

International agencies compile data for their own internal analysis … with the major relevance concern likely the countries’ ability to comply with the requirements of the databases … where, comparability across countries’ data is a paramount concern.

International agencies also release publicly their financial databases … with a significant number of external users of these data, including, financial-credit analysts, international macro-economists, governmental bodies, forecasters, etc.

External user needs and issues External users have simultaneous access to all of these

financial databases, and the relevance issues may not be quite so straightforward for them

With access to more financial databases than before comparability across countries’ data may take on a different dimension ─ comparability and harmonization across databases

For example, there may be an analyst assessing the economies of a select group of countries and using OECD national and financial accounts databases in the process. In addition, this same individual may whish to do conduct this analysis in the context of financial fragilities and may want to make reference to the IMF FSI for these same countries. In this case, it is desirable to have similar concepts and data and supporting information (to the extent possible)

IFDB supporting information Sources and methods or metadata documentation may

help outside users but likely do not go far enough in linking the information in the IFDB

In many (or most) countries financial databases, metadata exists … supplemented by sources and methods documents of varying degrees of detail. Despite the fact that both the OECD and IMF have made very good progress in this area, methodological notes and metadata exist in different degrees across the international financial databases

For users, it would be useful to be able to link this information across financial databases. At a very minimum each set of sources and methods or metadata could cross-reference each other, highlighting the close relationships among the IFDB

Issues in Canadian context A key external user recently called Statistics Canada

regarding different estimates for government net debt to GDP for Canada. Data pulled from the IMF website did not reconcile with either OECD data or published Canadian data. This is a key point: That user issues raised with seemingly inconsistent data often come back to the national statistical agency for clarification

In Canada, the national accounts staff submit the OECD financial statistics, while the Bank of Canada submits the to MFS and the FSI. For MFS Bank uses (i) data compiled for banking at the central bank as well as (ii) data for other industries (survey data), sectors (national accounts data) compiled at the STC. As a result, datasets will likely be different with respect to timing, detail and concepts between the OECD financial databases and the IMF MFS for Canada … clearly not a desirable situation from a user perspective

Summary This presentation (i) recognizes that each international financial

database has specific needs and (ii) supports strongly the continued development of these databases

The ongoing co-coordinated revision process to international standards has and will continue to assist greatly in harmonizing data and supporting information. A general move towards adoption of international standards by member countries has also gone a long way to improve international comparability

This presentation argues that more harmonization is likely possible and beneficial … and speculates on the potential for some degree of strategic streamlining between the two key agencies to reduce data collection burden and mainly to improve data for external users

In many countries the members of the WPFS respond to both OECD and IMF requests for financial data … Further, the WPFS is a group that has the collective expertise to understand and/or meet the demands of these varied international financial databases. WPFS is well-positioned to offer up some debate with respect to improving the harmonization across these databases

Comments? Message in this presentation reinforces the similarities of

IFDB … which have the potential to develop into an analytically powerful related set of financial databases

Presentation deliberately stops short of making direct recommendations … but it asks whether or not there is a consensus that improved harmonization could and should be pursued; and, if so, how, where and over what time frame

Implicitly suggested is admittedly somewhat ambitious and can be seen as objectives for the longer term, but this does not preclude the consideration of some short and medium-term suggested initiatives

E.G: That the two agencies consider the practicalities increased harmonization and of future co-operation on international financial databases, perhaps selecting one set of related databases as a test exercise over a specific time frame