By John Lowes and David Osborn
IntroductionA package of enhancements has been introduced in order to meet the recommendations of the Committee on the Global Financial System (CGFS) to collect more comprehensive information on cross-border financial linkages. These enhancements are to the International Banking Statistics (IBS), which will now identify UK MFIs’ positions with non-resident governments, other financial corporations, non-financial corporations and households. The new data will be published for the first time in the Bank's statistical releases on 'External business of monetary financial institutions operating in the UK' on 5 June 2015, and 'Consolidated worldwide claims', on 19 June 2015.
Following the financial crisis, the Committee on the Global Financial System (CGFS) proposed a series of recommendations to address some of the identified gaps in the International Banking Statistics (IBS). These recommendations formed part of a wide reaching series of data improvements known as the G20—Data Gaps Initiative (DGI).
The DGI comprised 20 numbered recommendations that sought to capture better the build-up of risk in the financial sector, improve data on cross-border financial linkages, monitor the vulnerability of domestic economies to shocks and improve the communication of official statistics.
Recommendations 8 to 12 sought to address the need for better data on cross-border financial linkages with recommendations 10 and 11 specifically focused on addressing gaps in the IBS.
To comply with these recommendations, the Bank introduced a range of changes to the key cross-border forms (Forms CC, CL and CE) which took effect for reporting from Q1 2014. The main changes were to collect additional sub-sector detail on non-bank counterparts for the existing IBS dataset. These data will be published for the first time in the External business of monetary financial institutions operating in the UK statistical release on 5 June 2015, and in the Consolidated worldwide claims statistical release on 19 June 2015.
International Banking Statistics
The IBS comprise two main datasets: the locational and the consolidated each collected on a quarterly basis. A cross-section of the data are published by the Bank, and a more detailed cross-section submitted to the Bank for International Settlements (BIS) for aggregation with comparable data for all other BIS reporting countries.
The locational dataset
The locational dataset covers the claims and liabilities of MFIs located in the United Kingdom (including the Bank of England) vis-à-vis counterparties located in all other countries. The dataset provides an indication of financial flows and amounts outstanding between UK MFIs and the rest of the world. Data are compiled by currency and nationality; with the new enhancements they will now have an expanded breakdown by economic sector.
A cross-section of the locational data are published quarterly in a statistical release entitled ‘External business of monetary financial institutions operating in the UK’.
The consolidated dataset
The consolidated dataset covers the worldwide claims of a sample of UK-owned MFIs (excluding the Bank of England), and their branches and subsidiaries worldwide, on counterparties in all countries. It can therefore be used to provide a ‘map’ of where the exposures of UK-owned MFIs lie. Claims of foreign-owned MFIs in the UK are excluded from this dataset, as is all intra-group business between offices within the same consolidation perimeter. There will now be an expanded sector breakdown, but no currency breakdown.
The consolidated data are published quarterly in a statistical release entitled ‘Consolidated worldwide claims’.
Enhancements to the IBS
Following the publication of the G20-DGI report in October 2009, the BIS liaised with all reporting countries and came up with an implementation plan to introduce recommendations 10 and 11, incorporating these changes over two stages.
The Stage 1 enhancements focused on the locational dataset and sought to make better use of existing information. The main enhancement here was the compilation of the residency by nationality dataset. This dataset identifies positions by parent nationality of the UK MFI e.g. German, Swiss, etc. and by location of the non-resident counterparts e.g. USA, Japan, etc. This information was already collected but had not formed part of the regular data dissemination programme to the BIS. The Bank implemented this change in September 2012 with effect from the Q2 2012 dataset.
The Stage 2 enhancements primarily involved additional data collection to identify positions with the main non-bank sub-sectors, and affected both the locational and consolidated datasets. For the locational dataset this meant identifying general government, other financial corporations, non-financial corporations and households economic sectors, while for the consolidated dataset just other financial corporations, non-financial corporations and households sectors were to be identified. The difference is that within the consolidated dataset, general government is implicitly included within ‘public sector’, along with central monetary institutions, whereas this combined sector is not explicitly identified within the locational dataset. Other sectoral enhancements in the locational dataset include identifying business with non-resident deposit taking corporations, broken-down by central monetary institutions, intra-group and other deposit taking corporations. Table 1 shows the new sector breakdown available for the locational and consolidated datasets.
Bank of England data collection
To prepare for the Stage 2 changes, the Bank consulted with the British Bankers’ Association (BBA) Statistical Advisory Panel to assess the feasibility of collecting the additional sub-sector information. The Bank sought to ‘future proof’ data collection by specifying the ‘encouraged’ sub-sector breakdown as opposed to the ‘recommended’ breakdown put forward by the CGFS. The proposed changes were agreed in December 2012 and reporting of the new sub-sector detail commenced with effect from Q1 2014, for both the locational and consolidated datasets.
A further enhancement to the consolidated dataset will be to identify positions with respect to UK counterparties. Hitherto, Form CE had only collected information on claims on non-residents, but from Q1 2014 this has been extended to consolidated positions on UK residents with a comparable sector breakdown as that for non-residents.
Publication of the enhanced IBS data
The new sub-sector information will be published for the first time in the ‘External business of monetary financial institutions operating in the UK’ statistical release on 5 June 2015, and in the ‘Consolidated worldwide claims’ statistical release on 19 June 2015. The new locational table C3.4 is shown in Annex 1 while changes to the existing consolidated table C4.2 are shown in Annex 2. Additional data for both the locational and consolidated datasets will be available on the Bank’s Statistical Interactive Database (IADB).
Future publication changes
The immediate focus of the Bank’s current work on the IBS has been on quality-assuring the new sectoral data to be published in June. Looking ahead, the Bank’s intention is to conduct a further review of both datasets, in particular the currency composition and nationality tables within the locational dataset. Any subsequent changes to published outputs will be outlined in a Bankstats article in due course.
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