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Ms. Anne Y. Kester

Abstract

1. International financial crises in the late 1990s underscored the importance of disseminating comprehensive information on countries’ international reserves and foreign currency liquidity1 on a timely basis. Deficiencies in such information have made it difficult to anticipate and respond to crises by obscuring financial weaknesses and imbalances. (See Box 1.1) Moreover, both the complexity and the importance of such information have increased as a result of the ongoing globalization of financial markets and financial innovations. The international financial activities2 that countries’ central banks and government entities undertake now occur in myriad forms, involve multiple domestic and foreign entities, and span locations around the globe. To assess countries’ foreign currency liquidity requires supplementing traditional data on international reserves that cover largely cross-border and balance-sheet activities with those on foreign currency positions and off-balance-sheet activities.

International Monetary Fund. Statistics Dept.

Abstract

1 International financial crises, such as in the late 1990s, have underscored the importance of disseminating comprehensive information on countries’ international reserves and foreign currency liquidity1 on a timely basis. Deficiencies in such information made it difficult to anticipate and respond to crises by obscuring financial weaknesses and imbalances (see Box 1.1). Moreover, both the complexity and the importance of such information have increased as a result of the ongoing globalization of financial markets and financial innovation. The international financial activities2 that countries’ central banks and government entities undertake occur in myriad forms, involve multiple domestic and foreign entities, and span locations around the globe. To assess countries’ foreign currency liquidity requires supplementing data on international reserves that cover largely cross-border and balance-sheet activities with those on other foreign currency positions and off-balance sheet activities.

Ms. Anne Y. Kester

Abstract

58. This chapter provides guidelines to assist countries in reporting data on the authorities’ foreign currency resources (comprising reserve assets and other foreign currency assets) in Section I of the template. Items I.A.(1) through I.A.(5) are used to report information on reserve assets and item I.B., on other foreign currency assets. All items in Section I refer to outstanding assets (stock) on the reference date. As noted in para. 42, to facilitate liquidity analysis, it is recommended that information on special features of the reporting country’s reserves management policy and major sources of funds for reserve assets and other foreign currency assets be described in country notes accompanying the template data. To enhance data transparency, it is also important to indicate in country notes specific changes in the reporting country’s exchange rate arrangements (for example, the implementation of dollarization) and their impact on the level of the country’s reserve assets.

International Monetary Fund. Statistics Dept.

Abstract

58 This chapter provides guidelines to assist countries in reporting data on the authorities’ foreign currency resources (comprising reserve assets and other foreign currency assets) in Section I of the Reserves Data Template. Items I.A.(1) through I.A.(5) are used to report information on reserve assets and Section I.B., on other foreign currency assets. All items in Section I refer to outstanding assets (stock) on the reference date. As noted in paragraph 42, to facilitate liquidity analysis, it is recommended that information on special features of the reporting country’s reserves management policy and major sources of funds for reserve assets and other foreign currency assets be described in country notes accompanying the template data. To enhance data transparency, it is also important to indicate in country notes specific changes in the reporting country’s exchange rate arrangements (for example, the implementation of dollarization) and their impact on the level of the country’s reserve assets.

Ms. Anne Y. Kester

Abstract

138. Section II of the template is used to report the authorities’ predetermined short-term net drains on foreign currency assets. “Predetermined” drains are the known or scheduled contractual obligations in foreign currencies. Contractual obligations of the authorities can arise from on-balance-sheet and off-balance-sheet activities. On-balance-sheet obligations include predetermined payments of principal and interest associated with loans and securities. (See also footnote 6 of the data template.) Off-balance-sheet activities that give rise to predetermined flows of foreign currency include commitments in forwards, swaps, and futures contracts.

International Monetary Fund. Statistics Dept.

Abstract

138 Section II of the Reserves Data Template is used to report the authorities’ predetermined short-term net drains on foreign currency assets. “Predetermined” drains are the known or scheduled contractual obligations in foreign currencies with both residents and nonresidents. Contractual obligations of the authorities can arise from on-balance-sheet and off-balance-sheet activities. On-balance-sheet obligations include predetermined payments of principal and interest associated with loans and securities (see also footnote 6 of the Reserves Data Template). Off-balance-sheet activities that give rise to predetermined flows of foreign currency include commitments in forwards, swaps, and futures contracts. Potential or possible receipts of foreign currency, such as from the future sale of commodities,1 future disbursements under loan commitments, and claims in dispute, among others, should not be included in this section. Only predetermined net drains derived from actual assets and liabilities should be included.

Ms. Anne Y. Kester

Abstract

180. Section III of the template covers contingent short-term net drains on foreign currency resources. As discussed in Chapter 3, net drains refer to outflows net of inflows. Contingent inflows and outflows simply refer to contractual obligations that give rise to potential or possible future additions or depletions of foreign currency assets. Contingent drains are by definition off-balance-sheet activities, since only actual assets and liabilities are to be reflected on balance sheets. Section III of the template differs from Section II because foreign currency flows to be reported in Section III are contingent upon exogenous events. As with predetermined foreign currency flows covered in Section II of the template, contingent flows can arise from positions with residents and nonresidents.