'Gaps' in central bank stability reports - IMF paper
Tuesday 10 January 2012 - by Karina Whalley
In a working paper released on Monday, it said that the reports need to take more forward-looking perspectives as well as a better view of financial interconnections in order to evaluate systemic risk accurately.
It found that the bulk of analyses and discussions of systemic risks tends to rely on the current levels of ratios as well as on the underlying factors behind past developments in the financial system, the paper said.
But the FSRs seldom include statements, assessments or even survey results that are indicative of what is to be expected in the near term. New Zealand and Korea were found to be the most forward-looking.
The study's authors were concerned that none of the reviewed reports included an analysis of linkages or exposures among domestic banks or showed any information on systemically important financial institutions or financial conglomerates.
They also said that an analysis of the interconnectedness of banks in different countries was not reported on a regular basis in the examined FSRs.
"There is no regular analysis or explanation of cross-border banking linkages in the FSRs," the study warned.
"More importantly, no analysis of sovereign exposures of the banking system is reported in the FSRs."
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