The new BIS ‘Handbook on security statistics’. A reason to celebrate.
The BIS (Bank for International Settlements) has, together with the IMF and the ECB, published a new handbook on how to estimate debt. A reason to celebrate. Mainly, of course, as the handbook enables more consistent and better measurement of debt-securities (mortgages, bonds and the like). But also as this handbook shows how much economic statistics are consistent with the ideas and concepts of institutional and Post-Keynesian statistics. And how inconsistent with mainstream economics. About the first fact we can cite the website blurb (which does not mention the phrase ‘The Great North Atlantic post 2008 debt crisis’ but we all know what this is about):
The importance of securities markets in intermediating financial flows, both domestically and internationally, underscores the need for relevant, coherent and internationally comparable statistics. This need was recognised by the G20 Data Gaps Initiative, launched in the aftermath of the 2007-08 global financial crisis with the support of the G20 finance ministers and central bank governors and the IMF’s International Monetary and Financial Committee. … Good securities data, along with monetary and financial statistics, provide important indications on the level of diversification of financial intermediation … It describes the main features of debt and equity securities as well as the institutional units and sectors as issuers and holders of securities, and discusses the statistical recording rules to be applied. It is expected that the Handbook will be widely applied, fostering harmonisation of the international securities statistics that support global economic, financial and macro-prudential analyses.
About the Post-Keynesian, institutional nature of the handbook: it uses the ‘Post-Keynesian’ quadruple accounting concept (see for instance : Post-Keynesian economics: New Foundations (Edward Elgar Publishing, 2014) by Marc Lavoie, or this Concerted Action post).
About the institutional nature of the manual: the quadruple accounting method, which maps the changes in the balance sheets of lenders as well as borrowers (hence: quadruple accounting, as a balance sheet has two sides) necessitates a complete overview of all lenders and borrowers in an economy. Which means that all ‘shadow banks’ and all ‘offshore’ companies, long neglected by mainstream economics, have to be part of the system, too. And the very fact that debt statistics and banks are taken more serious is a serious blow to the barter nature of many of many of the mainstream models – the institutional description of the banking sectors takes many pages! Not bad, for an institution like the ECB whose mainstream New Area Wide and Eagle model do not have a financial sector.