The IMF Upgrades Financial Soundness Indicators

F.P. Report

Washington: The IMF has upgraded its Financial Soundness Indicators (FSIs) database to fully reflect methodological improvements introduced in the 2019 Financial Soundness Indicators Compilation Guide (2019 FSIs Guide). The new FSI database enhances the coverage and cross-country comparability of data, following the more prescriptive approach of the 2019 FSIs Guide. It also incorporates a set of new indicators on concentration and distribution measures (CDMs), which provide information on tail risks, concentrations, and variations in distributions that are not directly captured by the aggregated averages.

FSIs are key macro-financial indicators to assess the overall soundness of the financial system. The original database was launched in 2007. The release of the new FSIs data and metadata covering over 140 jurisdictions constitutes a major improvement in the data made available for macro-financial surveillance.

The new database reflects the updated list of FSIs for banks (deposit takers) and an expanded list for nonbank financial institutions, focusing separately on nonbanks such as money market funds, insurance corporations, and pension funds. The new database also includes some additional indicators for household and nonfinancial corporate sectors, reflecting their importance as counterparts of financial institutions. In all, the 2019 FSIs Guide recommends the compilation of fifty-three FSIs with thirteen new indicators.

FSIs for banks have been upgraded to better gauge bank buffers compared to expected and unexpected losses. Additions such as new capital, liquidity, and asset quality metrics will serve to enhance the forward-looking aspect of the FSIs and to support increased policy focus on financial stability.

The new FSI database also features CDMs which will allow users to better understand and analyze risks associated with distributions and concentrations of seven specific FSIs for deposit takers. With the introduction of CDMs for selected FSIs, the IMF completes the implementation of the recently closed G-20 Data Gaps Initiative (DGI-2) recommendation #II.3 Concentration and Distribution Measures, one of the twenty recommendations endorsed by the G-20 Finance Ministers and Central Bank Governors.

The 2019 FSIs Guide and the new data series are available on the IMF’s FSI data portal.