The Financial Stability Board (FSB) has published a letter from it and two other international organisations (the International Monetary Fund (IMF) and the Bank for International Settlements (BIS)) to G20 Finance Ministers and Central Bank Governors on the work that has been undertaken to address data gaps involving foreign currency exposures.
The letter notes two key outputs being:
- the report on “Advancing the work on foreign currency exposures” prepared by the IMF. The report outlines the information included in the IMF statistical report forms which provide a conceptual framework for the analysis of domestic and cross-border foreign exchange exposures, from a residence based approach; and
- the BIS and FSB summary of the joint CGFS/FSB-SCAV workshop on risks from currency mismatches and leverage on corporate balance sheets. The key messages of the workshop underline the rising corporate leverage, the shifting of duration risk to investors, and the unavailability of consistent granular data, which masks the concentration of risks in particular sectors or institutions.
The letter notes that going forward, the IMF will take forward its work on the compilation of foreign currency exposures, in particular through the promotion of reporting of the foreign currency exposure table introduced in the sixth edition of its Balance of Payments and International Position Manual. The FSB will, among other things, consider proposing that accounting standard setters review disclosure requirements, in view of the changing needs of, and increasing demand from, stakeholders for information on foreign currency risk. The BIS will continue to monitor and analyse foreign currency exposures. Mismatches between funding currencies and asset holdings on financial and non-financial balance sheets have been a central theme of its recent research.
View FSB, IMF, BIS letter to G20 Finance Ministers and Central Bank Governors on work to address data gaps involving foreign currency exposures, 11 September 2014