Chapter

Work Undertaken by the IMF Statistics Department and the Committee in 2018

Author(s):
International Monetary Fund. Statistics Dept.
Published Date:
February 2019
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A. Globalization, Digitalization, and Financial Interconnectedness: Challenges for ESS

8. In a complex global financial system with increasing cross-border linkages, special purpose entities (SPEs) play an important role. In 2016, the Committee created the Task Force on SPEs (TFSPEs) with a two-year mandate to develop an IMF strategy to address existing data gaps by aiming to collect and disseminate internationally-comparable statistics on SPEs. In its final report, the TFSPE proposed a definition and typology of SPEs in the context of ESS and a data collection framework to identify separately their cross-border transactions and positions by 2021. STA will consult with the Intersecretariat Working Group on National Accounts (ISWGNA) to ensure alignment in the consideration of SPEs both in ESS and National Accounts; and will develop with the Committee’s advice, a data collection plan with the broad objective of collecting separate information with an increased data coverage for SPEs.

9. With the increasing fragmentation of production across borders, more detailed data are needed to understand the global value chains (GVCs). The working group (WG) on GVCs led by the Organisation for Economic Co-operation and Development and the IMF set up by the Committee in 2018 has identified components in the current balance of payments framework that are relevant for developing GVC indicators. In 2019, the WG will develop a GVC reporting template; conduct a stocktaking survey of current GVC data availability; examine how to better identify multinational enterprises’ broader role in the current account; and develop additional guidance that can help to identify merchanters and factoryless goods producers.

10. The expansion of GVCs has also led to new forms of trade finance with instruments beyond the standard financial account, resulting in the lack of a comprehensive dataset for its measurement. STA proposed a single satellite table capturing trade finance within and across borders including contingent instruments (such as letters of credit). Two Committee countries volunteered to participate in a pilot test for assessing the analytical value of the information collected via the proposed satellite table.

11. Coverage of the informal economy (IE) in ESS continues to be a challenge, particularly for low-income economies. In 2017, the Committee endorsed establishing the Task Force on IE (TFIE) with a two-year mandate to identify encouraged practices for compiling data on cross-border flows/positions linked to informal, underground, and illegal activities. In its preliminary report, the TFIE presented findings of the global survey-based inventory exercise, provided preliminary recommendations, and proposed the work ahead. Next steps include selecting, documenting, and disseminating encouraged practices in countries currently compiling estimates of the IE; and providing recommendations to improve IE data quality in ESS.

12. Digitalization is changing the way firms produce and market goods and services across borders, and its measurement is of critical importance. The Committee contributed to the preparation of a Handbook on Measuring Digital Trade, an initiative led by various IOs. The draft defines digital trade as all international trade flows that are either digitally ordered, digital intermediary platform-enabled, or digitally delivered. The Handbook is planned to be finalized in 2019.

13. Digitalization is also a driver in the increasing trend in cross-border mobile money transfers. A pilot survey to collect data from telecommunication companies launched in three countries (Botswana, Philippines, and Uganda) revealed that, while the use of mobile money for cross-border transfers is not widespread yet, it is significantly expanding—especially in certain developing regions, including low-income economies—thus contributing to financial inclusion. To strengthen coverage, STA will continue encouraging data collection on mobile money transfers through capacity building activities in such regions.

14. There is need for guidance on the definition, classification, and treatment of crypto assets. Based on the information available to date, the Committee agreed on defining crypto assets as digital representations of value made possible by advances in cryptography and distributed ledger technology. It also agreed on (i) classifying crypto assets in two categories— (a) Bitcoin-like crypto assets (BLCA), and (b) crypto assets other than BLCA (digital tokens); and (ii) treating crypto assets without counterpart liabilities as produced nonfinancial assets in a distinct sub-category under valuables. STA, after consultation with the ISWGNA, will prepare a clarification note on crypto assets to be posted on the BPM6 and Committee’s websites. The Committee will regularly monitor the evolution of crypto assets to assess whether the proposed treatment might need to be revisited.

15. The Committee continued efforts to enhance the data needed to support analysis of financial interconnectedness. The Committee reaffirmed its strong support to setting up a centralized database hosted by the IMF enabling the exchange of information on main securities’ issuers and their institutional sector. The database would significantly contribute to breaking down portfolio (Coordinated Portfolio Investment Survey- CPIS) positions by country and sector of securities’ issuers and holders (i.e., who finances whom). Following a successful pilot exercise conducted by the European Central Bank and the US Federal Reserve in 2017, in 2018 STA conducted a survey among CPIS reporters on the volume and format of the data exchange, legal limitations, and potential interest to participate. Based on the survey results, the Committee supported STA’s proposal to undertake a proof of concept (PoC) of a potential database with 17 volunteer countries. Based on the PoC’s outcome, STA will prepare a cost assessment exercise, such that STA can take a final decision on whether to build up the database.

16. Plans for a quarterly CPIS by 2019 were postponed. The G-20 Data Gaps Initiative Phase II call for examining the feasibility of increasing the CPIS reporting frequency was put on hold against other competing priorities (e.g., collecting IIP broken down by currency). On the methodological front, STA finalized the third edition of the CPIS Guide in consultation with the Committee.

17. To facilitate more informed assessments of external sector vulnerabilities, there are continued efforts to enhance the compilation of IIP items. In December 2017, STA started disseminating the IIP broken down by currency of those countries that reported the data. The Committee acknowledged the policy relevance of the data required for strengthening bilateral and multilateral surveillance. In this regard, in 2019 the Committee will study the feasibility of improving data availability on stock/flow reconciliation and IIP currency composition, as well as IIP diverging valuation methods that may contribute to the increasing global discrepancies.

B. Implementing the 2018 Research Agenda

18. The Committee’s active work on the research agenda contributed to maintaining the relevance of ESS concerning new economic and financial developments. As a result of this work, STA posted clarification notes on the BPM6 and Committee’s websites on the statistical treatment of reserve position in the IMF, currency swap agreements between central banks, precious metals accounts, and sectoral classification of IOs.

19. The Committee sought the need for a strategic paper that should guide the ESS research agenda by describing the overarching topics that need to be addressed. The paper will have a multi-year timeline linking the research agenda to the main policy priorities in a fast-changing global economic and financial environment; and will be coordinated with the research agenda of other macroeconomic statistical fields to avoid duplication of efforts and ensure consistency.

20. At the 2018 meeting, the Committee discussed several topics where guidance on their treatment in ESS is required. Clarification notes on the treatment of freight and insurance associated with merchanting, and the identification of superdividends in ESS will be posted on the BPM6 and the Committee’s websites.

21. STA will continue gathering research topics that require either clarification or more structural changes to the BPM6. The latter topics will be tackled when launching the process of revisiting the BPM6. The IMF departments identified several topics to be considered within the ESS research agenda that are relevant for the assessment of external sector vulnerabilities. Among them are developing stock-flow reconciliation tables, revisiting the treatment direct and portfolio investment equity income, and assessing additional data needs on the currency composition of cross-border flows and stocks.

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