Macroprudential Indicators of Financial System Soundness

This paper aims to take stock of current knowledge in the area of MPIs - macroprudential indicators. MPIs are defined broadly as indicators of the health and stability of financial systems. The paper also looks at issues related to the use of MPIs in IMF surveillance, and their dissemination either through the IMF Special Data Dissemination Standard (SDDS), or in other ways. In particular, the paper looks at: the MPIs that could be used most effectively by the IMF in its surveillance work; the modalities and options for the compilation of such data; and the possible dissemination of MPIs to the public. Initiatives taken by the IMF includes the issue in 1998 , of an internal guidance note designed to facilitate discussions in the context of article IV of the IMF charter. It suggests specific areas for discussion including: sectoral indicators; macroeconomic factors that impact the financial system; elements for the assessment of the institutional and regulatory frameworks; and the main effects of financial system distress. The paper has benefitted from feedback from a consultative meeting held in 1999 to discuss experiences of member countries & the international community.