Financial conditions indexes are developed for the United States and euro area using a wide range of financial indicators and a dynamic factor model. The financial conditions indexes are shown to be useful for forecasting economic activity and have good revision properties.
Several high-level international groups urged development of methodological standards for securities statistics. In response, the Bank for International Settlements (BIS), the European Central Bank (ECB), and the International Monetary Fund (IMF) jointly developed the Handbook on Securities Statistics. The Handbook is the first publication that deals exclusively with the conceptual framework for the compilation and presentation of relevant, coherent, and internationally comparable securities statistics. Part I of the Handbook covers debt securities issues. Other parts are under development and cover issues of other types of securities and securities holdings.
International Monetary Fund. External Relations Dept.
New research finds that emerging market countries can save millions of dollars in interest payments a year by adopting a statistical standard developed by the IMF. Research by John Cady of the IMF’s Statistics Department shows that spreads in seven emerging market countries declined by some 75 basis points—a reduction of about 20 percent—following their subscription to the Special Data Dissemination Standard (SDDS). For countries with large external debt, this “discount” is particularly good news. Camilla Andersen of the IMF Survey spoke with Cady about the significance of his findings.
The Report evaluates statistical practices relating to the measurement of international capital flows. In particular, the principal sources of statistical descrepancies in the component categories of the capital account in the global balance of payments are addressed.
The 1980s saw an unprecedented growth in the volume and the complexity of international financial transactions (Chart 1). This has been accompanied by a significant deterioration in the coverage and quality of the data. As a result, it has become very difficult, and at times impossible, for policymakers to base judgments on reported balance of payments statistics, particularly statistics on international capital flows. Unless appropriate action is taken, there will almost certainly be a further deterioration, with inevitable consequences for policymaking.
The Interim Committee of the Fund’s Board of Governors, in its communique of September 25, 1989, “encouraged the IMF’s Executive Board to continue improving the analytical and empirical framework underlying multilateral surveillance, including the measurement, determinants, and systemic consequences of international capital flows.” At a meeting in December 1989, the Executive Board decided that the Fund should undertake a study on the measurement of international capital flows. To this end, it was agreed that a working party of national and international balance of payments experts, drawn from industrial and developing member countries, be constituted under the chairmanship of Baron Jean Godeaux of Belgium. To support the Working Party, a small group of technical experts was organized and attached to the Statistics Department of the Fund. An interim report was submitted to the Managing Director in December 1990.