Proceedings of the IFC-ECCBSO-CBRT Conference, co-organised by the Irving Fisher Committee on Central Bank Statistics (IFC), the European Committee of Central Balance Sheet Data Offices (ECCBSO) and the Central Bank of the Republic of Turkey (CBRT), Özdere-İzmir, Turkey, 26 September 2016.
If anything, the Great Financial Crisis (GFC) of 2007–09 highlighted the importance of looking at the financial exposures of economic agents. Since then a key focus has been to enhance the provision of National Accounts-based aggregated information on financial positions, particularly with respect to the development of integrated sectoral accounts. The GFC also underscored the need for “going beyond the aggregates” to better analyse micro-level situations that could potentially have systemic implications. One key reason is that financial stress experienced at the level of individual entities, transactions or instruments can quickly reverberate to the entire financial system.
Indeed, a key element of the policy response after the GFC was to fill the data gaps related to these two aspects. Following the initial recommendations of the Financial Crisis and Information Gaps report of 20094 – issued by the International Monetary Fund (IMF) and the Financial Stability Board (FSB) and endorsed by the G20 – the international Data Gaps Initiative (DGI) emphasised the need for a better understanding of the financial system at both the macro- and microeconomic levels. It explicitly recognised the importance of collecting more granular data to “help straddle the divide between micro and macro analysis”. It also noted the challenges posed by the lack of data on non-financial corporates – with a specific recommendation (no 14) relating to “data on non-bank corporations’ cross-border exposures, including those through foreign affiliates and intra-group funding (…)”.
Central Balance Sheet Data Offices (CBSOs) can clearly play a major role in addressing such information needs. Although there are no unified practices or definitions, one will generally understand the expression “central balance sheet data” as the information covering firms’ individual financial statements. Given that a large part of the financial sector (eg banks, insurance companies etc) is supervised and reports such data, the focus is usually on the balance sheets of non financial corporates.
A number of countries have established CBSOs to collect, store, disseminate and analyse individual data on corporate balance sheets. Most of these CBSOs are located at the central banks and associated with their statistical functions. The information collected is usually derived from multiple sources, depending on national practices and/or institutional factors – related, in particular, to the legal framework governing the collection of firm-level information, the degree of confidentiality and the ability to share it among authorities. CBSO data may thus vary significantly from one country to another, in terms of periodicity, accounting consolidation and perimeter. They can be derived from multiple sources, in particular administrative registers, statistical surveys and official financial reporting data sets. Reflecting this complexity, a growing number of central banks are exploring “big data” techniques to deal with the large amount and complexity of information that can be included in such databases.
Not only do the statistics collected vary but their usage can also be very diverse. National experiences show that CBSOs comprise a wealth of information to support financial stability analyses, facilitating the understanding of financial linkages and the assessment of fragilities: for instance, the importance of banks’ credit exposures to non-financial corporates, the extent of firms’ reliance on specific funding sources etc. They can also provide useful insights into the economic performance of the corporate sector, including, for instance, the impact of their foreign operations and investment decisions. Furthermore, they help to assess the impact of public policies, such as monetary policy measures targeting specific borrowing segments (eg SMEs), macroprudential tools or even fiscal policy actions.