International Statistical Review (2005),73, 2, 169–172, Printed in Wales by Cambrian Printersc© International Statistical Institute

Discussant: Paul Van den Bergh

Bank for International Settlements, Basel, Switzerland. E-mail: paul.van-den-bergh@bis.org

1 Efforts to Harmonise Statistical Methodologies and Best Practices

The paper by Carson illustrates how the Fund is trying to push the statistical envelope to meetthe challenges of globalisation. It focuses on the Fund’s efforts to improve the statistical coverageof FDI, public finance and financial soundness indicators. With respect to the latter indicators, theBIS has been participated actively in the preparation of the Compilation Guide and the promotion ofthe indicators in IMF seminars around the world. Efforts were made to ensure that the methodologyused for the indicators, particularly those for the banking sector, were consistent with definitions ofthe Basel Committee on Banking Supervision as well as with the BIS methodology for its interna-tional banking statistics (e.g. approaches to consolidation). The BIS was also very supportive of theproposal to include statistics on real estate prices in the set of indicators and, together with the Fund,sponsored a conference on real estate prices and financial stability in October 2003. I am thereforepleased to note that the Australian Bureau of Statistics is making efforts to improve the timelinessand quality of house price statistics.

The three initiatives mentioned by Carson come on top of numerous other IMF initiatives suchas the development of manuals for statistics on balance-of-payments and external debt. The Fundundertakes numerous steps to promote the adoption of these methodologies amongst its constituency,for instance through training and technical assistance. The development of the data disseminationsystems (SDDS/GDDS) and the inclusion of the key statistical methodologies in the Reports onStandards and Codes are also putting pressure on national agencies to adjust their national method-ologies to the recognised international standards.

Various comments can be, and have been, made on these worthwhile efforts, by national compilersas well as users. One positive comment is that the Fund consults widely with statistical experts innational, regional and international statistical agencies as well as in the academic community and,where appropriate, in the private sector in developing its methodologies. One criticism, perhapstoo easy, is that the efforts made to date have yet to contribute to fully satisfactory internationalcomparability of key economic and financial data. Where full harmonisation with international bestpractice is not possible, statistical agencies have to be convinced, at a minimum, to describe throughappropriate metadata how their data deviate from international methodologies and best practices.One hope is that the e-standards for statistical data and metadata exchange (SDMX) which the IMFis developing in cooperation with other international organisations, including the BIS, will facilitatethe dissemination of such metadata. Better disclosure of deviations from international methodologiesmight exert pressure on statistical agencies to reduce such methodological “gaps”.

In terms of statistical best practices, a laudable initiative has been the development of the IMF’sData Quality Assessment Framework (DQAF). This framework is broader than the traditional onefocusing on accuracy,i.e. “getting the numbers right”, and spells out the multiple dimensions ofdata quality. The DQAF consists of six sections. In addition to a set of prerequisites of data quality,it covers five dimensions of quality, integrity, methodological soundness, accuracy and reliability,serviceability, and accessibility.

Wide consultation by the IMF in the development of the DQAF has guaranteed that there is broadacceptance that the framework represents international best practice. It is not surprising therefore that

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some of these dimensions are also part of the quality framework used by the Australian Bureau ofStatistics, as described in Trewin’s paper. There may be particular reasons why national, regional orinternational statistical agencies prefer to develop their own quality assessment methodology ratherthan adopt the international best practice. At the same time, national approaches limit the compara-bility across domains and systems and reduce the potential for international best practice to becomewidely accepted and used. The BIS for its part has used the DQAF to carry out a self-assessment ofthe quality of its international financial statistics (see BIS, 2003). It has found it particularly usefulto be able to use a commonly accepted terminology and to use the details provided by the DQAF toensure that it covered all relevant aspects in carrying out the self-assessment.

2 Statistics to Improve the Transparency of International Financial Markets

As mentioned by Trewin, financial markets need adequate information to operate efficiently. Trewinmentions a number of variables that are important at the national level, most of which are macro-economic and affect the determination of prices for financial instruments and assets. But modernfinancial markets, subject as they are to the impact of (de)regulation, globalisation and innovation,need additional types of data. In particular, they need statistics that shed light on overall market size,relative importance of various types of market participants and market segments, trading patternsand flows of financial transactions, and on market liquidity and exposures. This is a challenge fornational financial markets and, even more importantly, for international financial markets that spanvarious jurisdictions and market segments. Traditional financial account statistics are not adequatein this respect and are available with too long a time lag to be of much use to market participants.Statistics in this area are typically available from central banks, market infrastructure providers (e.g.trading systems or clearing houses) or commercial sources (e.g. surveys by consultancy firms).

The BIS and its member central banks, most of which oversee systemically important financialsystems, have been at the forefront in monitoring international financial markets. In the 1960s theystarted to collect and publish comprehensive data on the so-called euro-currency or offshore bankingmarkets. As concerns grew about the country risk exposures of the international banking system todeveloping countries, these statistics were complemented by data on cross-border banking claims ona fully consolidated basis. All these data are based on reports by internationally active banks to theirnational central bank, which transmits aggregate national data to the BIS, which in turn aggregatesand publishes data for the global international banking system. The various banking statistics areavailable with various breakdowns, including by borrowing country, currency, instrument, sector,and maturity. Moreover, the BIS undertakes to calculate and publish not only stock data but alsoexchange-rated adjusted flow data.

As the role of international securities markets grew in the 1980s, the BIS started to compileinformation from individual central banks and commercial databases to estimate and publish statisticson these markets as well. Moreover, over time it has built up a database on domestic securities markets.In the 1990s the BIS also became increasingly involved in the coordination of the joint surveys whichcentral banks in major financial centres carried out on a regular (now triennial) basis of activities in theglobal foreign exchange markets. As derivative markets expanded in this period, central banks askedthe BIS to become active in the collection and publication of international data on exchange-tradedand over-the-counter derivative transactions. As with the banking data, the foreign exchange andderivatives data are collected at the national level first and then transmitted to the BIS for compilingglobal statistics. All the non-banking statistics are also published with relevant breakdowns for therespective market segment.

It is an ongoing challenge to adapt the BIS international financial statistics in line with ongoingmarket developments.For instance, as from end-2004 the consolidated banking statistics will identifybanks’ country risk exposure on a so-called ultimate risk basis by reallocating risk to the country

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in which the ultimate guarantor of a financial claim resides. From that point, risk exposures willalso measure more comprehensively banks’ off-balance sheet positions relating, for instance, to theirderivatives transactions. Regarding derivatives, the BIS derivatives statistics will in the course of2005 include data on new financial instruments such as credit default swaps, no comprehensive dataon which are currently available.

Apart from the analytical and methodological challenges, the BIS and its member central bankshave to take into account the need to balance the cost of collecting new statistics (for themselves butalso for the reporting banks) with the perceived benefits of better statistics. So far at least, banks andother reporting market participants have in general been willing to provide the information, as theBIS data are the sole source for monitoring the global markets in which these institutions operate.Moreover, the BIS publishes the data accompanied by market commentaries that are carefully studiedby analysts in the private sector.

3 The Role of the IFC

The BIS, as a service organisation for central banks, is starting to become more involved in theactivities of the IFC, as these are seen to be closely associated with policy work and other statisticalinitiatives undertaken by various Basel-based groups. This should, in the near future, help the centralbank statistical experts to become more pro-active in international discussions on statistical issues, atthe theoretical level as well as at the methodological level in various statistical domains. Over time itshould also facilitate cooperation with other international organisations, private market participantsand other ISI sections and groups.

In 2002 the BIS hosted a conference for the IFC on “Challenges to Central Bank StatisticalActivities”, which covered the statistical requirements of central banks, both with respect to mone-tary/economic and financial stability. In September 2004 the BIS is hosting another IFC conferenceon the theme of “Central Bank Issues Regarding National and Financial Accounts”. At the next ISISession in Sydney in 2005 the IFC will be sponsoring a number of Invited and Contributed PaperMeetings relating to finance and statistics, including cost, quality and relevance of financial statis-tics; financial soundness indicators; accounting standards and their impact on financial statistics;optimal methods for data quality improvement in financial statistics; and the use of survey methodsin financial statistics. Some of these will be part of a special theme day on Statistics and Finance,which will include a keynote speech by a senior executive of the Reserve Bank of Australia. Lookingfurther ahead, committee members have already identified a number of possible future “financial”topics for discussion such as statistical challenges for bank supervisors (e.g. validation of banks’risk management models), the use of payment and settlement data for financial analysis, and theusefulness of commercial databases or commercial statistical concepts and tools.

The IFC, a relatively young organisation, is facing a number of challenges. The first is to continueto build up the network amongst its central bank members that have developed in recent years. Thesecond is to develop active cooperation with private sector experts, many of whom have commercialinterests in particular statistical data or methodologies or have limited resources for, or interest in,participating in international meetings. Thirdly, the IFC will have to further develop a niche foritself under the ISI umbrella and to seek active cooperation with other ISI groups, including theIAOS, the IASS and the Statistics in Business and Industry Committee. All this needs to be donewhilst avoiding duplication with the activities of existing regional or international statistical groupsin which the central banks are already actively involved.

References

Bank for International Settlements (2003). Guide to the International Financial Statistics, February 2003.http � ��www�sdmx�org.

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Related Reading

Van den Bergh, P. & Enoch, C. (2001). Recent Developments in Statistical Requirements for Financial Stability and in theirUse: the Perspective of International Organisations.IFC Bulletin, 9, 9–13.

[Received March 2005, accepted May 2005]