Delineation of sectors and financial instruments in a matrix of balance sheets for an economy is central to specifying the BSA framework for analysis of the potential for emerging liquidity or solvency problems. The sectorization and financial instruments in the 7 x 7 matrix presented in this paper provide a useful baseline for applying the BSA and can be adapted to focus on particular sectors to assess vulnerabilities in the economy. This framework can also be modified to accommodate data limitations and still be useful for vulnerability analysis.
Datasets introduced in recent years, combined with existing data sources, have contributed substantially to improved balance sheet data for macroeconomic vulnerability analysis. Until recently, data readily available from public sources, such as the IMF’s International Financial Statistics or World Bank or BIS databases, often had to be complemented, sometimes with great effort, by specially compiled datasets. The databases that have become available recently—particularly SRFs, IIP, QEDS, and CPIS—can reduce the need for special compilation in the future.
This paper used this approach for South Africa to complete the 7 x 7 intersectoral framework presented here. The sectorization and classification of financial instruments are sufficiently detailed to show the variation in intersectoral positions, by financial instrument and currency. In general, the method presented in this paper for populating the 7 x 7 matrix of balance sheets of the BSA framework can be replicated for other countries to capture vulnerabilities relevant for macroeconomic analysis and policymaking.
BSA analysis based on the new datasets can enhance surveillance activities by tracking the evolution of balance sheet vulnerabilities on a regular and timely basis. This provides a more comprehensive, up-to-date diagnosis of balance sheet vulnerabilities—perhaps even as they develop—at a detailed level if needed. Earlier detection of balance sheet vulnerabilities can expand the range of policy options to address emerging vulnerabilities. The results can also be used as a basis for assessing risks in sectoral balance sheets using the contingent claims approach.