1 / 14

Paper for ISI Congress, Dublin 2011 Describes banking interventions in Ireland

Paper for ISI Congress, Dublin 2011 Describes banking interventions in Ireland Treatment in National Accounts (ESA95/MGDD) Specific methodological issues. Chart 2: Irish Government Deficit. Chart 1: Irish Government Debt. Methodological issues. Guarantees

una
Download Presentation

Paper for ISI Congress, Dublin 2011 Describes banking interventions in Ireland

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Paper for ISI Congress, Dublin 2011 • Describes banking interventions in Ireland • Treatment in National Accounts (ESA95/MGDD) • Specific methodological issues

  2. Chart 2:Irish Government Deficit

  3. Chart 1:Irish Government Debt

  4. Methodological issues • Guarantees • Capital injections into publicly owned banks • Classification of units (bad banks) • Re-routing of transactions

  5. Government guarantees • Off-balance sheet contingent liabilities or • Government Debt

  6. EU Government guarantees linked to the financial crisis (end March 2011) Source: Eurostat

  7. Government guarantees • SNA93/ESA95 • Guarantees contingent liabilities • Exceptionally in the MGDD can be Government Debt • SNA08/ESA10 • Standardised guarantees • One-off loans still contingencies but

  8. Government guarantees Para 17.212 of SNA: “As an exception, one-off guarantees granted by governments to corporations in certain well-defined financially distressed situations and with a very high likelihood to be called are treated as if these guarantees are called when the financial distress is recognised”

  9. Capital injections into public units • SNA93/ESA95 • Injections to cover accumulated losses – Capital transfer • Other injections as owners – Equity • SNA08/ESA10/MGDD • Injections to cover accumulated losses – Capital transfer • Other injections as owners – Equity or capital transfer, depending on expected return. SNA08 less prescriptive than ESA10/MGDD which looks for a sufficient rate of return

  10. Classification of public units • Private /Public control • Concept more refined in new SNA/ESA, but still judgemental. • Market/Non-market • Also more refined in new SNA/ESA. ESA still more prescriptive (50% rule)

  11. Classification of publicly controlled bad banks within EU • Private /Public control? • Under very restrictive conditions, financial corporations controlled by Government may be classified outside of General Government Sector if majority privately owned • Only during the financial crisis

  12. Classification of publicly controlled bad banks within EU • Market/Non-market • Application of ESA 50% rule to financial corporations difficult • Bad bank - Defeasance structure or MFI? • In ESA, MFI’s based on list maintained by ECB for statistical reporting and Eurosystem operations

  13. Classification of publicly controlled bad banks within EU • Market/Non-market • Old bank in run down mode may have banking licence and be on MFI list (Anglo) • Newly established bad bank may not have banking licence (Northern Rock) • ECB MFI list used for statistical reporting but also Eurosystem • Comparability may be improved by re-routing transactions so classification becomes secondary

  14. Summary • During financial crisis the scale of government interventions in banks very large • Borderline cases - Inconsistencies in recording of capital injections and in classification of units. • Effort to improve transparency of reported data especially by Eurostat • New SNA08/ESA10 does not fully resolve problems. Economic reality the key but can be difficult to implement

More Related