Public Information Notice: IMF Strengthens Standards for Public Dissemination of Data on International Reserves
March 26, 1999
Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case. |
The IMF has taken action to strengthen the specifications for dissemination of data on
international reserves under its Special Data Dissemination Standard (SDDS).
Background
The strengthening of the SDDS is part of the ongoing efforts to improve the architecture of the
international financial system. Recent financial crises have underscored the importance of
more comprehensive and timely information on international reserves, to help promote
informed decision-making in the public and private sectors and thereby improve the functioning
of global financial markets. The proposals for reserves data under the SDDS were developed
in response to guidance from the IMF Interim Committee. They are intended to establish new
standards for the provision of information to the public on the amount and composition of
reserve assets, other foreign exchange assets held by the central bank and the government,
short-term foreign liabilities, and related activities that can lead to demands on reserves (such
as financial derivatives positions and guarantees extended by the government for private
borrowing).
The reserves data template, spelling out the information to be provided, reflected the
experience in member countries, the results of two previous Executive Board discussions, and
comments received through consultations with data users in the public and private sectors and
statistical compilers. From the outset, there was widespread interest in increasing
transparency in this area. However, many Fund members have expressed concerns about the
resource costs of compiling and disseminating more detailed, frequent, and timely data and
the possibility that this would reduce the effectiveness of exchange market intervention
operations. The final decisions reflected a balancing of these objectives and concerns. The
template was finalized in cooperation with a working group of the Committee on the Global
Financial System of the G-10 central banks. The G-10 central banks have also adopted the
template for use in the data dissemination activities of that Committee. The template is
attached, and copies also may be found on the websites of the IMF (www.IMF.org) and the
BIS (www.bis.org).
The SDDS is a standard of good practices in the dissemination of economic and financial data,
to which IMF member countries may subscribe on a voluntary basis. It is intended for use
mainly by countries that either have or seek access to international financial markets, to signal
their commitment to the provision of timely and comprehensive data. As of March 1999, there
were 47 subscribers to the SDDS.
Executive Board Discussion
Executive Directors welcomed the revised staff proposals to strengthen the prescriptions for
the international reserves data category under the SDDS. In particular, Directors appreciated
that the revised proposals represented an attempt to balance the objective of strengthening
reserves data dissemination against concerns about the costs of observing the new standards
and the confidentiality of information on intervention operations.
In commenting on the reserves data template, a few Directors regretted that the template did
not contain as much information as the initial staff proposals in December 1998. Some other
Directors suggested that the degree of detail being requested, particularly on reserve-related
liabilities and other potential drains on reserves, was still excessive. On the whole, however,
most Executive Directors were satisfied that the template provided a good basis for efforts to
enhance the availability to the public of more frequent, timely, and comprehensive information
on reserves and related items.
Most Directors considered that recent international financial crises demonstrated the
importance of disseminating information on reserves and related items with a short lag and a
relatively high frequency. In that context, several Directors noted that publication of reserves
data on a weekly basis, with a lag of only a few days, had become increasingly common
among emerging market countries active in international capital markets; these Directors
encouraged other members to follow such practices. However, since the reserves template
called for much more detailed data, many Directors also stressed that there would be a need
for countries to adapt their internal reporting systems to generate the information needed
under that template. Several Directors suggested that more consultation on the template,
particularly with developing countries, would be useful. Directors looked forward to the
completion of the operational guidelines for compilers after the Spring Meetings. They also
considered that it was appropriate for the SDDS prescriptions for the periodicity and timeliness
of data dissemination in connection with the new template to be well balanced and to reflect
the consensus among members.
In that context, most Directors agreed that the SDDS prescription should be for dissemination
of full data corresponding to the new template on a monthly basis, with a lag of no more than
one month, although data on total reserve assets would still be prescribed for dissemination on
a monthly basis with a lag of no more than one week. The dissemination of data for the full
template on a weekly basis, with a one week lag, was to be encouraged. This proposal is
therefore adopted.
Bearing in mind the advantages of more frequent and timely data, as well as the concerns of
some members about the costs of disclosure, Directors agreed that the prescriptions for the
periodicity and timeliness of reserves data dissemination should be reassessed in the context
of the Third Review of the SDDS, around the end of 1999. A few Directors were of the view
that the issue of periodicity and timeliness should be revisited after sufficient experience had
been accumulated under the enhanced SDDS and more progress made in addressing the
issue of symmetry in data dissemination between the public and private sectors.
Directors indicated that the transition period for observance of the new standards should be
through March 31, 2000.
Executive Directors were generally satisfied that it had been possible to reach conclusions on
this matter. At the same time, a number of Directors noted that the SDDS prescriptions for
reserves data were a minimum standard which many members already exceeded. They
underscored their hope that for such countries the present decision would not lead to any
reduction in the frequency, or increase in the lag, in reporting, or a reduction in the quality of
data.
Many Directors stressed that it would be important for efforts to strengthen the dissemination
of information on public sector financial operations to be accompanied by improvements in the
availability of information on the activities of private institutions in international financial
markets.
Data Template on International Reserves/Foreign Currency Liquidity (Information to be disclosed by the monetary authorities and other central government, excluding social security) (1) (2) (3)
III.Contingent short-term net drains on foreign currency assets (nominal value)
|
Maturity breakdown (residual maturity) | ||||
Total | Up to 1 month | More than 1
month and up to 3 months |
More than 3
months and up to 1 year |
|
1. Foreign currency loans and securities (6) | ||||
2. Aggregate short and long positions in forwards and futures in foreign currencies vis-a-vis the domestic currency (including the forward leg of currency swaps) (7) | ||||
(a) Short positions | ||||
(b) Long positions | ||||
3. Other (specify) |
Maturity breakdown (residual maturity, where applicable) | ||||
Total | Up to 1 month | More than 1 month and up to 3 months |
More than months and up to 1 year |
|
1. Contingent liabilities in foreign currency | ||||
(a) Collateral guarantees on debt falling due within 1 year | ||||
(b) Other contingent liabilities | ||||
2. Foreign currency securities issued with embedded options (puttable bonds) (8) | ||||
3. Undrawn, unconditional credit lines (9) | ||||
(a) with other central banks | ||||
(b) with banks and other financial institutions headquartered in the reporting country | ||||
(c) with banks and other financial institutions headquartered outside the reporting country | ||||
4. Aggregate short and long positions of options in foreign currencies vis-a-vis the domestic currency (10) | ||||
(a) Short positions | ||||
(i) Bought puts | ||||
(ii) Written calls | ||||
(b) Long positions | ||||
(i) Bought calls | ||||
(ii) Written puts | ||||
PRO MEMORIA: In-the-money options (11) | ||||
(1) At current exchange rates | ||||
(a) Short position | ||||
(b) Long position | ||||
(2) + 5 % (appreciation of 5% of the domestic currency) | ||||
(a) Short position | ||||
(b) Long position | ||||
Maturity breakdown (residual maturity, where applicable) | ||||
Total | Up to 1 month | More than 1 month and up to 3 months |
More than months and up to 1 year |
|
(3) - 5 % (depreciation of 5% of the domestic currency) | ||||
(a) Short position | ||||
(b) Long position | ||||
(4) +10 % | ||||
(a) Short position | ||||
(b) Long position | ||||
(5) - 10 % | ||||
(a) Short position | ||||
(b) Long position | ||||
(6) Other (specify) | ||||
IV. Memo items
1. In principle, only instruments denominated and settled in foreign currency (or those whose valuation is directly dependent on the exchange rate and that are settled in foreign currency) are to be included in categories I, II, and III of the template. Financial instruments denominated in foreign currency and settled in other ways (e.g., in domestic currency or commodities) are included as memo items under Section IV. 2. Netting of positions is allowed only if they have the same maturity, are against the same counterparty, and a master netting agreement is in place. Positions on organized exchanges could also be netted. 3. Monetary authorities defined according to the IMF Balance of Payments Manual, Fifth Edition. 4. In cases of large positions vis-a-vis institutions headquartered in the reporting country, in instruments other than deposits or securities, they should be reported as separate items. 5. The valuation basis for gold assets should be disclosed; ideally this would be done by showing the volume and price. 6. Including interest payments due within the corresponding time horizons. Foreign currency deposits held by nonresidents with central banks should also be included here. Securities referred to are those issued by the monetary authorities and the central government (excluding social security). 7. In the event that there are forward or futures positions with a residual maturity greater than one year, which could be subject to margin calls, these should be reported separately under Section IV. 8. Only bonds with a residual maturity greater than one year should be reported under this item, as those with shorter maturities will already be included in Section II, above. 9. Reporters should distinguish potential inflows and potential outflows resulting from contingent lines of credit and report them separately, in the specified format. 10. In the event that there are options positions with a residual maturity greater than one year, which could be subject to margin calls, these should be reported separately under Section IV. 11. These "stress-tests" are an encouraged, rather than a prescribed, category of information in the IMF's Special Data Dissemination Standard (SDDS). Could be disclosed in the form of a graph. As a rule, notional value should be reported. However, in the case of cash-settled options, the estimated future inflow/outflow should be disclosed. Positions are "in the money" or would be, under the assumed values. 12. Distinguish between assets and liabilities where applicable. 13. Identify types of instrument; the valuation principles should be the same as in Sections I-III. Where applicable, the notional value of nondeliverable forward positions should be shown in the same format as for the nominal value of deliverable forwards/futures in Section II. 14. Only assets included in Section I that are pledged should be reported here. 15. Assets that are lent or repoed should be reported here, whether or not they have been included in Section I of the template, along with any associated liabilities (in Section II). However, these should be reported in two separate categories, depending on whether or not they have been included in Section I. Similarly, securities that are borrowed or acquired under repo agreements should be reported as a separate item and treated symmetrically. Market values should be reported and the accounting treatment disclosed. 16. Identify types of instrument. The main characteristics of internal models used to calculate the market value should be disclosed. |
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