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THE USE OF FINANCIAL ACCOUNTS IN ASSESSING FINANCIAL STABILITY

THE USE OF FINANCIAL ACCOUNTS IN ASSESSING FINANCIAL STABILITY. Reimund Mink and Nuno Silva. OECD Working Party on Financial Statistics Paris, 6 October 2003. FINANCIAL ACCOUNTS IN ASSESSING FINANCIAL STABILITY. Contents of the presentation. Quarterly MUFA Financial stability analysis

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THE USE OF FINANCIAL ACCOUNTS IN ASSESSING FINANCIAL STABILITY

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  1. THE USE OF FINANCIAL ACCOUNTS IN ASSESSING FINANCIAL STABILITY Reimund Mink and Nuno Silva OECD Working Party on Financial Statistics Paris, 6 October 2003

  2. FINANCIAL ACCOUNTS IN ASSESSING FINANCIAL STABILITY Contents of the presentation • Quarterly MUFA • Financial stability analysis • Uses of MUFA in financial stability analysis • Macro-prudential analysis at the ECB • Quarterly MUFA - way forward

  3. QUARTERLY MUFA The ESA 95 concepts and definitions • Residency and institutional sectors • Financial assets • Sequence of accounts • Market valuation and accrual accounting • Original maturity

  4. QUARTERLY MUFA The main uses of MUFA Monetary policy analysis Financial stability analysis Statistical quality analysis

  5. QUARTERLY MUFA Publication of data • Quarterly press release • Quarterly data • - ECB Monthly Bulletin, Table 6.1 • - ECB Monthly Bulletin, Table 6.2 • - ECB Statistical Pocket Book, Table 7.1 - 7.3 • Annual data • - ECB Monthly Bulletin, Table 6.3 • - ECB Statistical Pocket Book, Table 6.1 and 6.2

  6. QUARTERLY MUFA Example: Table 1 of the Press Release

  7. QUARTERLY MUFA Input for monetary policy analysis • Commentary in the ECB Monthly Bulletin • Quarterly briefing note to the ECB Executive Board

  8. FINANCIAL STABILITY ANALYSIS The ECB definition “A condition whereby the financial system is able to withstand shocks without giving way to cumulative processes, which impair the allocation of savings to investment opportunities and the processing of payments in the economy”

  9. FINANCIAL STABILITY ANALYSIS Components of macro-prudential analysis MPIs Financial accounts STRESS TESTS Macroeconomic data (prices, interest and exchange rates) Market-based data (stock prices, credit ratings) Macro-prudential analysis Structural information (relative size, ownership of corporations) Qualitative information (compliance with standards) Financial accounts

  10. USES OF MUFA IN FINANCIAL STABILITY ANALYSIS The contribution • Integrated approach (sectors, instruments and stocks/flows) • Contribution to the general Improvement in statistics • Source to derive MPIs for the non-financial sectors • Financial innovation and its implications • Relationship with the “real” side of the economy

  11. USES OF MUFA IN FINANCIAL STABILITY ANALYSIS Methodological issues • Residency criterion • Aggregation and consolidation • Valuation and accrual accounting • Maturity definition

  12. MACRO PRUDENCIAL ANALYSIS AT THE ECB Article 3.3 of the ESCB Statute “Contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system”

  13. MACRO PRUDENCIAL ANALYSIS AT THE ECB The regular outputs • The annual macro-prudential report on the EU banking system • The annual report on the structural developments of the EU banking system • The ECB biannual Financial Stability Review

  14. QUARTERLY MUFA - WAY FORWARD The future of quarterly MUFA • Extend the current TFIs for the non-financial sectors and ICPFs to seven sectors • Improve the timeliness (90 days) • Complete the instrument coverage and the link between stocks and flows • Sectoral accounts • Quarterly who-to-whom system

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