The International Monetary Fund has today recognised that the Office for National Statistics (ONS) is fully meeting the Special Data Dissemination Standard Plus, the highest tier of IMF’s data standards. James Benford and Rebecca Richmond reflect on the new data we are now publishing and how this lays the foundation for further improvements.
Comprehensive, good quality data on the financial sector is essential for protecting financial stability. For the United Kingdom, as an international financial centre, that contributes to the stability of the global financial system. Data need to not only consider components of the financial sector individually but also the connections within the sector and beyond it to show how risks might propagate.
The global financial crisis in 2008 made it clear that there were gaps in the data available at the time that made it harder to see how risks were building up, particularly in the non-regulated part of the financial system. To make the risks more transparent international organisations, including the International Monetary Fund (IMF), under a mandate from the G20 group of countries, brought in new data standards, both to close data gaps and make sure data are published in a timely fashion. Since then, and recognising the UK’s role as a global financial centre, the ONS has been working towards meeting the highest tier of the new standards by making improvements to relevant parts of our data. Today we have achieved an important milestone in that the UK is now accredited as meeting all the requirements in the IMF’s Special Data Dissemination Standard Plus (SDDS+).
The SDDS+ is the highest tier of the IMF’s data standards and is focussed on countries with important financial sectors as those are so important to the international monetary system. It adds nine additional requirements compared with the Special Data Dissemination Standard, which the UK has met since 1999.
The UK already met some of the additional requirements when it signed up to take the steps necessary to comply with the new standards. However, there were key gaps in our data on the financial sector. Over the last few years, we have worked to meet those gaps, sourcing new data and making more use of existing information, working closely with the Bank of England and the IMF. New data include:
- Sectoral balance sheets which complement the National Accounts balance sheet with a more granular view of the financial sector assets and liabilities, strengthening analysis of vulnerabilities across the financial system. The increased granularity comes from enhanced sectorisation within the Monetary Financial Institutions sector into central banking, deposit taking corporations and money-market funds, using newly sourced data.
- More granular accounts for other Financial Corporations (i.e. insurance companies, pension funds and other financial companies other than banks and building societies), which are particularly important for the UK, reflecting the global role played by this sector and help fill a gap compared to data which was historically focussed more on banks. They also show exposures and connections of this sector to the rest of the economy, bringing visibility to the complexity of the financial system.
- More granular information on holdings of over £3 trillion debt securities, including government and corporate bonds, that are issued in the UK and abroad and are held within the UK. Understanding these holdings provides greater transparency on how risks might spread.
All of this new data, alongside the information already published, meets IMF standards on the frequency and timeliness of publication, as well as on transparency around the methods used and their limitations.
More information on the latest changes is published in our update article. Meeting SDDS+ both demonstrates the progress we have already made in improving the quality and availability of data on the financial sector and lays a foundation for further improvements.
One of the biggest future developments will come when we incorporate data from our improved Financial Services Survey into the UK’s National Accounts, and from there into the SDDS+ tables. We also have plans to make greater use of Bank of England data. The progress we have made on this and the work still to be done is described further in the article. This is part of our broader plan to improve the quality of our key statistics.
Feedback can be submitted to FlowofFundsDevelopment@ons.gov.uk
James Benford is Director-General for Surveys and Economic and Social Statistics at the Office for National Statistics.