Getting the Dog to Bark: Disclosing Fiscal Risks from the Financial Sector

September 28, 2015

Preview Citation

Format: Chicago

Timothy C Irwin. Getting the Dog to Bark: Disclosing Fiscal Risks from the Financial Sector, (USA: International Monetary Fund, 2015) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Fiscal reporting is intended to warn of fiscal crises while there is still time to prevent them. The recent crisis thus seems to reveal a failure of fiscal reporting: before the crisis, even reports on fiscal risk typically did not mention banks as a possible source of fiscal problems. One reason for silence was that the risk arose partly from implicit guarantees, and governments may have feared that disclosure would increase moral hazard. The crisis cast doubt, however, on the effectiveness of silence in mitigating risks. This paper discusses how fiscal risks from the financial sector could be discussed in reports on fiscal risk, with a view to encouraging their mitigation.

Subject: Banking, Economic sectors, Financial crises, Financial sector, Financial sector policy and analysis, Financial sector risk, Fiscal reporting, Fiscal risks, Public financial management (PFM)

Keywords: Australia and New Zealand, Bank, Bank creditor, Bank run, Banks' creditor, Banks' creditworthiness, Bank's debt, Bank's manager, Budget reports, Contingent liabilities, Crisis, Crisis stability, Deficit, Financial crisis, Financial sector, Financial sector risk, Fiscal reporting, Fiscal risks, Guarantee, Implicit guarantee, Implicit guarantees, Public finance, Risks of financial crisis, Savings-and-loan crisis, Too-big-to-fail bank, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2015/208
Stock No:

WPIEA2015208
ISBN:

9781513507736
ISSN:

1018-5941

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