CGFS releases Report on the BIS International Banking Statistics

Today the BIS releases a new report on the BIS international banking statistics. The report has been prepared by a Working Group of the Committee on the Global Financial System (CGFS) which was established in autumn 1999. This follows up on earlier work carried out by the CGFS in the wake of the Asian financial crisis, and was inspired by the perception that greater emphasis needed to be placed on the value of good financial statistics to support informed decision-making by the private sector.

In the course of its deliberations, the Working Group discussed alternative views regarding what goals should be set out for consolidated BIS banking statistics. The Group concluded that the consolidated banking statistics should aim to be a key source of information on the country risk exposures of internationally active banks. It was thus decided that, where feasible, consolidated banking data should cover all relevant aspects of financial institutions' exposures - including guarantees by third parties, undrawn contingent credit facilities and off-balance sheet financial contracting. In addition, the focus of the BIS statistics was to be changed so as to adopt detailed reporting of data collected on an ultimate risk basis, with a view to developing a statistical system consistent with commercial banks' own risk management practices. At the same time, the Working Group appreciated the importance of information on the basis of residence of the immediate borrower. Such information is crucial, for example, to enable cross-checks on country compilations of external debt statistics.

Two considerations played a prominent role in the Working Group's formulation of its recommendations. The information content of the BIS banking statistics was to be increased as regards the assessment of banks' credit exposure toward individual countries, and the focus of the statistics was to be shifted from a flow of funds' perspective to a financial statistics' perspective. On the basis of these considerations, the Working Group decided to call for a modification of the existing BIS international banking statistics and to recommend the following actions:

• The BIS consolidated banking statistics should be restructured to present data on an ultimate risk basis. However, the BIS should continue to compile and publish statistics on an immediate borrower basis.
• The target date for the new data series should be set at the end of year 2004, while detailed plans on the data series to be collected - including guarantees by third parties, undrawn contingent credit facilities and off-balance-sheet financial contracting - should be prepared by the end of 2001.
• The Working Group recommends that the BIS revise its presentation of the commitment data to emphasise their interpretation as a measure of a contingent source of borrower funding and hence credit risk.

The CGFS regards the recommendations of the Working Group as a welcome step towards the development of consolidated banking statistics as a source of aggregate information compatible with that produced by banks' own internal risk measurement procedures. The modified data will, thus, add to the general efforts undertaken to heighten transparency in support of international financial stability, while maintaining the status of the BIS international banking statistics as a key data source for developments in the international financial markets.

The report is available on the BIS website at www.bis.org.

Notes: The Committee on the Global Financial System is a central bank forum established by the Governors of the G10 central banks to monitor and examine broad issues relating to financial markets and systems with a view to elaborating appropriate policy recommendations to support the central banks in the fulfilment of their responsibilities with regard to monetary and financial stability. In carrying out these tasks, the Committee places particular emphasis on assisting the Governors in recognising, analysing and responding to threats to the stability of financial markets and the global financial system.

The Working Group that prepared the report was chaired by Satoshi Kawazoe of the Bank of Japan. The Working Group's members are listed in the report.