Integrating the Economic Accounts: Lessons from the Crisis

The 2008-09 financial crisis was not primarily a consequence of a lack of information about financials market activities. Rather, it reflected an analytical failure to draw the appropriate conclusions about the linkages and implications of financial innovations. However, gaps in the statistical framework for monitoring the evolution of the financial system and its risk characteristics did contribute to the problems. This paper draws some conclusions from the crisis to discuss the major data gaps in the current statistical framework for overseeing the financial sector-principally the flow of funds. These gaps include measures to evaluate changing risk characteristics of financial claims, their maturity and liquidity, the emergence of the shadow banking system, and the lack of transparency with regard to the distribution of counterparty risks. The first part of the paper details the major financial sector innovations and their interactions that led up to the crisis. That is followed by an exploration of their real sector consequences.