Jean-Claude Trichet: The development of euro area statistics from an ECB
perspective
Speech by Mr Jean-Claude Trichet, President of the European Central Bank, delivered at the third
ECB Conference on Statistics, Frankfurt am Main, 4-5 May 2006.
* * *
Colleagues, fellow central bankers, ladies and gentlemen,
It is a pleasure for me to address you on the occasion of the closure of the Third ECB Conference on
Statistics. With this conference, we have continued our biennial tradition of holding a dialogue
between the compilers of statistics and policymakers, academics and other users on the development
of statistical requirements. This tradition was started four years ago by Eugenio Domingo Solans, the
first ECB Executive Board member responsible for statistics, who left the ECB in May 2004 and sadly
passed away soon afterwards.
The subject of this conference has been financial statistics for a global economy, and I would like
to use this occasion to share with you some reflections upon the four themes discussed during this
conference, namely:
1. Are financial statistics good enough to capture globalisation?
2. What are the challenges for national data collection in a global world?
3. Which are the statistical implications of financial stability and financial integration? and finally
4. What can we say on global statistical governance?
I will obviously focus on the necessary development of euro area statistics and I would like to begin
with a brief review of the recent developments in these statistics.
Recent developments in euro area statistics
An evaluation of current euro area statistics should start with three observations. First, official
statistics provide the foundation for both the economic and the monetary analysis of the ECB and
therefore for its monetary policy. In addition, they are indispensable for the other functions of the
ECB, for other economic policy-making in Europe and for a smooth functioning of the financial system.
This also means that high demands are placed on these statistics.
Second, it is still less than a decade ago that the statistical requirements for the European Economic
and Monetary Union were agreed and that the first euro area statistics became available. It can now
be concluded that the compilers of statistics in Europe have gone a long way towards
harmonising their national statistics and meeting the requirements in a relatively short period of
time, and I would like to compliment them on this achievement.
Third, this progress has been possible thanks to excellent cooperation within Europe's statistical
community, which consists of national central banks (NCBs), national statistical institutes (NSIs),
Eurostat and the ECB. In particular, I would like to pay tribute to the Statistics Committee of the
European System of Central Banks (ESCB) and the European Committee for Monetary, Financial and
Balance of Payments statistics (CMFB) for the very fruitful role they play.
In fact, since I last addressed this audience, in April 2004, significant progress has been made,
although also still much remains to be done. Concerning the euro area statistics compiled by the ECB,
in close cooperation with the NCBs, I would like to recall some recent enhancements:
• Since January 2005, the euro area balance of payments has contained a quarterly
geographical breakdown of the counterparties involved in transactions with residents.
•
Furthermore, the international investment position (i.i.p.) statistics, which show the balance
sheet of the euro area, are now available at a quarterly frequency.
•
In a different field, the ECB now regularly compiles a set of statistical indicators that shed
light on the state of euro area financial integration in many different financial markets.
•
Another improvement concerns the semi-annual release by the ECB of a residential property
price indicator for the euro area.
• The ECB's publication of the
quarterly government revenue, expenditure and deficit for
the euro area, based on contributions from NSIs, was recently complemented by fairly
detailed data on government debt and the deficit-debt adjustment.
•
The ECB's financial analysis benefits from separate statistics that are now available for
securities issued at fixed and floating rates, and zero-coupon bonds.
• Finally, the accessibility of ECB statistics and the national breakdowns has been
enhanced as the same set of tables is now available on the websites of the ECB and of most
of the Eurosystem NCBs, in the national languages of the central banks concerned.
In addition to the financial and monetary statistics compiled by the Eurosystem, the ECB makes
intensive use of general economic statistics compiled by Eurostat and the NSIs. First and foremost,
this concerns the Harmonised Index of Consumer Prices (HICP) for the euro area, which has
continued to be both timely and reliable. In this context, the gap between inflation perceptions and
actual inflation is now decreasing in many euro area countries. As you know, this gap originated when
the euro was introduced and it became complex for consumers to process price information. The ECB
also supports the further development work in this field, including the priority attached to compiling a
reliable indicator for the price development of owner-occupied housing services and a further
enhancement and harmonisation of adjustments for changes in the quality of goods and services. The
latter work should also benefit the estimation of GDP volume growth, which is another key indicator for
the ECB.
GDP and the national accounts statistics on which it is based have recently been revised in many
countries. Whereas methodological improvements are welcome, it is important that the timing of
such revisions, and of the release of the Principal European Economic Indicators more
generally, be coordinated among countries. Otherwise, European users could be confronted with
constantly changing euro area aggregates. In this context, recent ECB analysis found that, since the
start of the euro area, the revisions of the principal quarterly euro area indicators have been
fairly modest and significantly smaller than the revisions of the same indicators for the largest
euro area countries and for the United States. This is explained by the fact that revisions of national
statistics largely cancel out at the euro area level. At the same time, this result reinforces the
importance of aggregate euro area statistics for the analysis of the euro area economy.
In view of the still growing importance of euro area statistics, I am particularly looking forward to a
forthcoming new milestone, i.e. the first release of integrated financial and non-financial euro area
accounts for the institutional sectors - namely households, non-financial corporations, financial
corporations and the government - and for the transactions with the rest of the world. These euro
area accounts will provide a wide-ranging overview of the euro area economy and enable a much
more comprehensive analysis to be made of the interactions among sectors and between
nonfinancial and financial developments. In turn, this will permit an even more comprehensive
crosschecking of the economic and monetary pillars of the ECB's monetary policy analysis.
Furthermore, these accounts will provide users for the first time with regular key economic indicators
for the euro area, such as household savings and corporate after-tax profits. They will be compiled in
close cooperation between the ECB, the NCBs, Eurostat and the NSIs, and will be developed in two
steps. The first annual accounts will be published soon and the inaugural release of the quarterly euro
area accounts is expected in the spring of next year.
These and other recent enhancements in euro area statistics are not only of great importance for
policy-making in Europe but also contribute to a better analysis of the global economy. However,
continuing globalisation poses some particular challenges to statistics, as has been clearly
demonstrated by the excellent contributions to this conference. Drawing from these contributions, I will
now turn to the themes you have discussed.
Are financial statistics good enough to capture globalisation?
Globalisation stems from economic interlinkages, which are statistically reflected in the balance of
payments and international investment position statistics and in the "rest-of-the-world" accounts of the
national accounts framework.
In a world of increasing financial integration, statistics on cross-border transactions and positions also
gain in importance. However, at present the analysis of international economic inter-linkages is
hampered by the fact that, for all pairs of countries, bilateral transactions statistics do not mirror each
other; this is the asymmetry problem. Related to this, the sum of the financial transactions in the
balance of payments typically does not match the sum of the non-financial transactions, the difference
being called "errors and omissions". To eliminate both types of discrepancy, it seems best to employ
a multi-pronged strategy. At least, it would be expedient if the legal framework protecting statistical
confidentiality were to allow the exchange of such confidential information among the compilers
concerned, for the strict purpose of statistical quality improvement.
Globalisation can only be analysed in a meaningful way if the concepts, definitions and
classifications underlying the statistics are standardised. Fortunately, this is largely the case, as
these standards are laid down in, for example, the 1993 System of National Accounts and the IMF
Fifth Balance of Payments Manual. These global guidelines are being updated and the ECB attaches
particular importance to the reinforcement of their mutual consistency and to the outcome of this
process in general. For instance, it is of key importance that these statistical standards prescribe a
faithful representation of economic reality as reflected in monetary transactions and do not
impute an artificial price to non-monetary transactions or recognise assets and liabilities that are
not viewed as such by the economic actors. It should then also be acknowledged that welfare cannot
be adequately captured by any single statistic, including GDP.
The revised statistical standards should also reflect the fact that modern economies are knowledge
economies, in which the quality of the labour force is the key success factor. This requires the
regular compilation of disaggregated labour accounts as an integral part of the national
accounts. This, in turn, would substantially enhance the analysis of productivity growth and shed a
better light on the evolving global distribution of labour, in which skill levels play a crucial role.
In general, the statistics not only attempt to capture the ever increasing globalisation, but they are also
affected by it. This is a subject to which I now turn.
Challenges for national data collection in a global world
Globalisation has certainly benefited from a progressive deregulation of cross-border transactions. At
the same time, though, this deregulation has adversely affected the quality of national statistics. For
instance, equal prices for cross-border and national payments in euro are difficult to match with widely
divergent reporting obligations related to these two types of payment. Traditionally, however, many
balance of payment reporting systems were based on cash settlements, and a transition to a more
direct reporting system requires a substantial investment for the statistics compiler concerned,
which is typically the NCB.
More generally, globalisation has intensified competition among countries and this has also led to an
increasing emphasis on the administrative burden put on business. Although the statistical response
burden accounts for at most a few percent of the total administrative burden, it has also come
under close scrutiny. Indeed, statistics compilers should constantly attempt to minimise the costs for
respondents and to make use of already existing information to the maximum extent. This requires,
however, that statisticians have unrestricted legal access to all relevant administrative records,
while of course maintaining their very strict confidentiality standards. This applies, for instance, to all
tax records, including the cross-border data that become available through the EU Savings Directive.
This being said, I am convinced that it is not possible to obtain good quality, timely statistics on the
basis of administrative records alone. In other words, the high-quality statistics that are
indispensable for the ECB's monetary policy unavoidably place some burden on business,
including small and medium enterprises, even if this burden has to be minimised. It is therefore
important that this data collection modality is adequately anchored in a legal framework, in order to
guarantee representative survey results. At the same time, as regards the collection of data from the
financial sector, supervisors and statisticians should intensify their cooperation in order to align,
and wherever possible integrate, their data collection efforts to a maximum extent.
Whereas globalisation complicates the compilation of national statistics and also makes them
somewhat less meaningful, particularly in those fields where the decisions are now made at the euro
area level, the collection of euro area statistics should continue to make the best possible use of the
enormous statistical expertise at the NCBs and the NSIs. However, this does not imply that for many
years to come each and every statistic should be compiled by the relevant authorities in each and
every country. Instead, it is perhaps time to draw conclusions from the fact that the collection of
statistics, particularly the increasingly automated retrieval of statistical data from the ledgers of larger
corporations, is typically characterised by significant economies of scale. Similarly, significant
efficiency gains would be reaped if sample sizes for statistics, particularly the very timely, high
frequency statistics, are attuned to European needs. It goes without saying that countries that still
want to spend additional resources to maintain nationally representative samples will be free to do so.
Statistical implications of financial stability and financial integration
Although this conference has devoted a single session to the statistical requirements for financial
stability and financial integration analysis, these requirements are not easily aligned at first sight. In
fact, financial stability analysis puts new demands on data availability, if only because it requires
consolidated data and strengthens the case for making available a whole range of micro-data. At
the same time, however, macro-statistics are typically much more reliable than micro-data,
particularly those in the tail of the distribution, if only because significant misreporting by an "average"
firm almost invariably means that it ends up in the tail. In any case, this analysis would be served by
the setting-up of reliable and flexible pan-European micro databases. In fact, the ECB, in close
cooperation with the NCBs, embarked on such an ambitious project several years ago, when it
designed the Centralised Securities Database (CSDB) to contain an accurate representation of
individual securities issued, or potentially held, by euro area residents.
Another requirement for financial stability analysis is related to the increasing tendency to transfer
risks among institutions and among countries. This also points to important remaining gaps in our
current euro area statistics, particularly concerning insurance corporations and pension funds, the
collateralisation of lending business, investment funds (which include hedge funds), and special
purpose entities (which include securitisation vehicles).
Concerning statistical indicators of financial integration, I have already alluded to the ECB's
contribution and I look forward to the release of an enlarged set of indicators this autumn. In addition,
the contribution of the ECB to the short-term paper (STEP) market in Europe could be mentioned, in
particular through the regular publication of statistics on volumes and prices.
Global statistical governance
I have given some examples of trends that all point to a more global, and particularly more European,
coordination of statistics. It is conceivable that over time the European statistical systems will develop
in the direction of genuine systems with regional competence centres, coordinated by the
European institutions. The mutual interdependence of statistics compilers would then increase,
which in turn calls for a further strengthening of international statistical governance. In this
regard, it may be mentioned that the ECB has subscribed to a set of universal core principles for
international statistics. Similarly, it may be worthwhile exploring an elaboration of the Eurosystem
mission statement in the field of statistics.
Good governance is particularly important for statistics that have a direct administrative and
policy use in Europe, such as the indicators for assessing the convergence of EU Member States that
do not yet belong to the euro area and the statistics underlying the excessive deficit procedure. While
Eurostat is responsible for these statistics, it can benefit, when deciding upon conceptual issues, from
the considerable statistical expertise available at the ECB, the NCBs and the NSIs, as brought
together in the CMFB. In any case, the compilation of government finance statistics - and all
other statistics for that matter - should not be subject to political considerations. The compilers
of these statistics must act in full scientific independence, and the government must ensure that
sufficient resources are made available for their task. At the same time, it is important to regularly
review the cost/benefit ratio of existing statistics that were agreed upon many years ago.
Concluding remarks
Ladies and gentleman, credible euro area statistics lie at the heart of the ECB's monetary
policymaking. At the same time, these statistics are embedded in and affected by a globalising world. The
key to meeting the challenges this poses lies with further enhanced international cooperation
among statistics compilers. Another key success factor is continuous cross-fertilisation between
users and producers of statistics. An example of such cooperation in the near future will be the first
release of integrated financial and non-financial euro area accounts for the institutional sectors, which
will permit an even more comprehensive cross-checking of the economic and monetary pillars of the
ECB's monetary policy analysis. In addition, users and policy-makers should keep in mind that
indispensable high-quality statistics unavoidably place some burden on business, including small and
medium enterprises, although this burden can be minimised if statisticians obtain appropriate access
to administrative data collected for other purposes.
This conference has indeed provided a significant contribution to the cross-fertilisation between users
and producers of statistics and I would like to thank you all very much for your participation and for
your attention.