INTERNATIONAL MONETARY FUND - Second Review of the Special Data Dissemination Standard--Further Considerations

http://www.gata.org/files/IMFGoldDataMemo--3-10-1999.pdf

DOCUMENT OF INTERNATIONAL MONETARY FUND
AND NOT FOR PUBLIC USE

15. Central bank officials indicated that they considered information on gold loans and swaps to be highly market-sensitive, in view of the limited number of participants in such transactions. Thus, they considered that the SDDS reserves template should not require the separate disclosure of such information but should instead treat al1 monetary gold assets, including gold on loan or subject to swap agreements, as a single data item. They also confirmed a view, taken by a number of countries (both inside and outside the G-10) at the December Board meeting, that the disclosure of the composition of reserves by individual currencies would be market-sensitive but that they would have no objection to disclosure of such information by groups of currencies.

16. Officials of the ECB indicated that the ECB intended to disseminate data on its own holdings of official reserves and related items in accordance with the G- 10 and the Fund staff templates, provided that these were not too different, although they preferred to report on one unified template. They expected to be able to begin publishing in this format during the second half of 1999 and did not foresee major difficulties in disseminating the requisite information (although they confirmed that information on gold loans and swaps was considered highly market-sensitive). The ECB had just begun to publish the consolidated financial statement of the Eurosystem on a weekly basis, with a lag of about a week. The financial statement included five line items that were relevant for reporting under the CGFS template. These were:

- on the assets side--gold and gold receivables; claims on non-euro area residents in
foreign (i.e., non-euro) currency; and claims on euro area residents in foreign currency;

20. Conversations with a few Executive Directors confirmed the reluctance of their
authorities at present to disclose information on their international reserve positions on a highly frequent and timely basis, as a matter of policy. The motivations underlying this position were: (a) a desire to preserve the confidentiality of foreign exchange market intervention for a period, in order to enhance its effectiveness; (b) a reluctance by some monetary authorities to reveal information on their official transactions in exchange markets on a more frequent and timely basis than the disclosure of transactions by major international investors; and (c) a concern by some countries that weekly reserves data could be inherently more volatile than monthly data, which could be misleading and potentially destabilizing to exchange markets. This position had stimulated, during the December Board meeting, a lively discussion of the costs and benefits of increased transparency under various circumstances and the information requirements for well-functioning international financial markets. The staff will not seek to reproduce that discussion in the present paper.

23. On the assets side of the template, the major changes are:

- the elimination of any requirement to disclose the amount of gold loans, and of the
explicit requirement to disclose the volume of monetary gold. The revised template would require only that the total value of monetary gold (including gold loans) be disclosed. Monetary authorities would be expected to disclose the valuation basis for their official gold holdings, which would be done most straightforwardly in practice by indicating the volume and price;