IMF takes a “major step” on key financial indicators
The IMF has published standardized indicators from about 50 countries that allow analysts to assess the soundness of their banking sectors and compare them with those of other countries.
Rob Edwards, Director of the IMF’s Statistics Department, called the dissemination of the financial soundness indicators “a major step” in the IMF’s efforts “to strengthen the surveillance of member countries’ financial systems, increase data transparency, and promote cross-country comparable data.”
Within a year, 62 countries—all judged to be of importance to the global financial system—will have posted financial soundness data. They are participating in a pilot project set up in the wake of financial crises during the 1990s in Latin America, Russia, and, especially, Asia that highlighted the lack of reliable data to assess the soundness of national banking systems.
The countries were asked to produce soundness indicators for deposit-taking institutions (mainly commercial banks) that measure capital adequacy, asset quality, earnings and profitability, liquidity, and sensitivity to market risk. They were also encouraged to produce indicators that provide additional information on the banking sector and cover nonbank financial institutions, such as insurance companies and pension funds; financial sector customers, such as corporations and households; and the real estate and securities markets.