This is a Working Paper and the author(s) would welcome IMF WORKING PAPER any comments on the present text. Citations should refer to a Working Paper of the International Monetary Fund, men* tioning the author (s), and the date of issuance. The views
This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.Looking ahead to the creation of a Gulf Cooperation Council (GCC) Currency Union in 2010, the paper covers some implications for the statistical programs of the GCC countries. Despite uncertainty over the structure of the proposed union, the paper envisions several types of mutually reinforcing statistics-convergence criteria, statistics on the core policy variables and instruments, additional macroeconomic data, specialized statistics related to the economic and institutional conditions within the union, and public information. Major changes to national statistical programs are needed that should begin soon. JEL Classification Numbers: C82, E42, E58, F02, F33, F36, G15, G21, O53
The development of indicators of financial soundness responds to the need for bet ter tools to assess financial systems' strengths and vulnerabilities. A broad search for tools and techniques to detect and prevent financial crises was prompted by the inter national financial turmoil of the late L990s. More recent episodes of instability have further highlighted the importance of continuous monitoring of financial systems as a crisis prevention tool. The IMF has undertaken a number of initiatives in this area, no tably in support of strengthened surveillance of member countries through the joint IMP-World Bank Financial Sector Assessment Program, launched in 1999. Initial ef forts were aimed at identifying a broad set of prudential ru1d macroeconomic vari ables that are relevant for assessing financial soundness-referred to as macropruden tial indicators. More recent work has focused on a subset of these indicators-both aggregate bank balance sheet and income statement information, and aggregate indi cators of financial fragility of nonfmancial firms and non bank financial markets-re ferred to as financial soundness indicators (P Sis).This paper brings forward recent advances in our understanding of financial sound ness indicators with a view to supporting ongoing efforts by national authorities and private institutions worldwide to monitor financial system soundness. The paper also discusses the use of financial soundness indicators in the operational work of the IMF, and identifies significant gaps in knowledge and directions for further work. The material in this paper was originally prepared for discussions in the IMF Executive Board in June 2001.The insights contained in this paper are the result of the efforts of many. In particu lar, we would Like to express our appreciation for member countries' pruticipation in the IMF Survey on the Use, Compilation, and Dissemination of Macroprudential ln dicators, which helped to provide comprehensive info1mation on country practices. A number of background documents by IMF staff and others referred to in this paper were also critical in distilling analytical lessons on the selection and use of the indica tors. We would like to thank also Mahinder S.
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