Using the Balance Sheet Approach in Surveillance: Framework and Data Sources and Availability

The sudden disruption in the capital accounts of key economic sectors has been a distinguishing feature of the most recent emerging market crises. The balance sheet of an entire economy can sharply deteriorate as the exchange rate, interest rates, and other asset prices adjust to withdrawals of bank deposits, sales of securities, and abrupt halts of debt rollovers. By employing new data sets that provide detailed, frequent, and timely financial statistics, this study enhances application of the balance sheet approach to examining macroeconomic vulnerabilities. These data are produced regularly by IMF member countries and can be mapped into the balance sheet approach framework for more effective tracking and analysis.