Archive:G20 Data Gaps Initiative (DGI) – background
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The G20 Data Gaps initiative is a set of 20 recommendations on the enhancement of economics and financial statistics. The programme was launched in order to improve the availability and comparability of economics and financial data, as the turmoil that hit the markets - when the financial crisis broke out in 2007-2008 - highlighted the need of broader datasets for policy makers and supervisors to better assess the evolution of the economy, as well as the intervention required.
In April 2009, the G20 Finance Ministers and Central Bank Governors called on the International Monetary fund (IMF) and the Financial Stability Board (FSB) to identify major financial and economic information gaps that needed to be filled. As a result, a few months later, in September, the IMF and the FSB presented the report that would launch the Data Gaps Initiative (DGI), along with the set of recommendations to be implemented in the years to come.
One of its leading initiatives is the Principal Global Indicators (PGI) website, which collects and disseminates comparable data for the G20 economies.
Context
The burst of the financial crisis highlighted the degree of interconnection and integration of the economies and the markets worldwide. While the crisis was not the result of a lack of proper economic and financial statistics, it nonetheless caught supervisors, policy makers and investors unprepared by areas poorly covered by existing datasets.
On the one hand, as policy makers and supervisors soon realised, the information gaps identified at the time didn't lie in the quality of economics and financial statistics, already very high, but in their availability and comparability across countries. In particular, due to the interconnections amongst economies and financial institutions, information gaps emerged from exposures taken through complex instruments and off-balance entities, and from the cross-border linkages of financial institutions. On the other, market players and investors where unsettled by uncertainty and lack of reliable information, with consequent negative repercussions on the stability of financial markets.
The Group of 20 advanced and large emerging market economies, which represents almost 90 % of global GDP, became fully aware of the need of comprehensive and timely data and called on the IMF and on the Financial Stability Board (at the time called Financial Stability Forum) 'to explore gaps and provide appropriate proposals for strengthening data collection'.
Such call was endorsed by the IMF's International Monetary and Financial Committee in April 2009, and the following September IMF and FSB delivered to the G20 their Report, which identified the sectors where data gaps were to be filled and presented a set of 20 recommendations to be implemented in the years to come. These recommendations are divided in four different, albeit interconnected groups: build-up risk in the financial sector, cross-border financial linkages, vulnerability of domestic economies to shocks, and improving communication of official statistics.
Parallel to that, as the crises had demonstrated a need to enhance communication, at the end of 2008 the Inter-Agency Group on Economic and Financial Statistics (IAG) was established in order to coordinate statistical issues and to strengthen data collection. The IAG comprises the Bank for International Settlements (BIS), the European Central Bank (ECB), Eurostat, the International Monetary Fund (IMF) Chair, the Organisation for Economic Co-operation and Development (OECD), the United Nations (UN), and the World Bank (WB).
The 20 recommendations
In October 2009, the IMF and FSB presented The Financial Crisis and Information Gaps report to the G20 Finance Ministers and central bank Governors. The Report, and the detailed action plan that followed, identified all the issues that need to be addressed and divided it into 20 recommendations, that have been organised in four categories and which are currently being implemented. (The first recommendation, R1, being the implementation of a concrete action plan).
Monitoring risk in the financial sector (R2-R7)
The need to better capture the build-up of risk in the financial sector is to be achieved through the following path: by strengthening the international reporting of current financial health and soundness of financial institutions (so-called Financial Soundness Indicators), especially by expanding the number of reporting countries; by developing measures of aggregate leverage and maturity mismatches in the financial system; and by improving coverage of risk transfer instruments, including data on the credit default swap markets.
International network connections (R8-R14)
Data collection on international financial network connections is to be achieved by enhancing information on financial linkages of systematically important global financial institutions; and strengthening data gathering initiatives on cross-border banking flows, investment positions, and exposures, in particular, to identify activities of nonbank financial institutions.
Sectoral and other financial and economic datasets (R15-R19)
The third group of recommendations is focussed on monitoring the vulnerability of domestic economies to shocks through: strengthening the sectoral coverage of national balance sheet and flow of funds data; promoting timely and cross-country standardised and comparable finance statistics; and working to disseminate more comparable data on real estate prices.
Communication in official statistics (R20)
Amongst its recommendations to the G20, IMF and FSB pointed out the need for an enhanced communication in official statistics, as in some instances users were not fully aware of the available data series to address critical policy issues. A further step was required after the major improvements in the harmonisation and availability in economic and financial statistics, that had already been achieved as a consequence of the Mexican crisis first and the Asian crisis later.
The PGI Website
The Principal Global Indicators (PGI) website was launched in April 2009, in order to facilitate the monitoring of economic and financial developments. It is a joint undertaking of the IAG and is currently hosted by the IMF. Data is available as time series with an annual periodicity, but there are also quarterly and monthly data.
Most of the statistical indicators needed to assess the developing financial and economic situation have been produced on a regular basis by G20 countries. Yet, the crisis called the attention of supervisors and policy makers on the necessity of making these data not only more easily available, but more comparable as well. In this light, the PGI page displays datasets on macroeconomic financial indicators under a double perspective: cross-countries and country concepts. In the first case, it allows a country-to-country comparison on key macroeconomic and financial indicators; in the latter it presents a detailed collection of indicators for a specific country. Further information has been added, that is sectoral transaction and balance sheets, and countries cross-border positions.
One of the goals of the data Gaps Initiative is the compilation of area-aggregates for the G20 as a total, being Gross Domestic Product (GDP) and Consumers Price Index (CPI) the first two released.
Aggregate G20-GDP
Starting from the 14th March 2012, the OECD compiled and released for the first time ever a G20-GDP aggregate. After that, the G20-GDP aggregate became part of the regular OECD quarterly news release on economic growth, at around 70 days after the reference quarter.
Aggregate G20-CPI
On the 14th October 2013, the OECD Secretariat has compiled and disseminated the G20-CPI, its second G20 aggregate ever after the G20-GDP. The OECD keeps on releasing the aggregate on a monthly basis, at around 40 days after the end of the reference period, following the release of national CPI and HICP data by all OECD and G20 countries.
Consumer price indices (CPIs) measures inflation as price changes of a representative basket of goods and services typically purchased by households. The G20 CPI aggregate reflects national CPIs for all G20 countries that are not part of the European Union (EU) while it reflects the Harmonised Indices of Consumer Prices (HICP) for the EU, its Member States and for Turkey.
Bibliography
- R. Barcellan, Principal Global Indicators – a G-20 initiative, in European Economic Statistics, 2010, Eurostat, pp. 112-121
- A. Burgi-Schmelz, Data to the rescue, in Finance and Development, March 2009 (Vol. 46, n. 1)
- Economic and Financial Committee, Status Report on Information Requirements in EMU, Brussels, 25 October 2012
- R. Heath, FSB Data Gaps Workshop, Basel, May 2, 2012
- R. Heath, Why are the G-20 Data gaps Initiative and the SDDS Plus Relevant for Financial Stability Analysis?, IMF Working Paper, January 2013, IMF
- IMF-FSB, The Financial Crisis and Information Gaps. Report to the G-20 Finance Ministers and Central Bank Governors, October 29, 2009
- IMF-FSB, The Financial Crisis and Information Gaps. Progress Report. Action Plans and Timetables, May 2010
- IMF-FSB, The Financial Crisis and Information Gaps. Progress Report on the G-20 Data Gaps Initiative: Status, Action plans, Timetables, September 2012