Jean-Claude Trichet: The continuing quest for reliable and timely statistics
Opening address by Mr Jean-Claude Trichet, President of the European Central Bank, at the
fifth ECB conference on statistics "Central bank statistics: what did the financial crisis
change?", Frankfurt, 19 October 2010.
* * *
Ladies and gentlemen,
I would like to welcome you, on behalf of the Executive Board of the European Central Bank,
to our biennial ECB statistics conference. I am delighted that the conference has once more
attracted many distinguished participants from central banks around the world, European and
international institutions, the financial sector, academia and the media.
As many of you know, the conference was originally scheduled for April this year, but had to
be postponed because of the Icelandic ash cloud. Making a virtue out of necessity, the
conference now also contributes to marking the first World Statistics Day tomorrow on
"twenty-ten-twenty-ten". World Statistics Day has been designated by the General Assembly
of the United Nations to remind us all of the importance of official statistics and the core
values of service, integrity and professionalism. Also on behalf of Mr. Stark, I would like to
invite you to join us in a dedicated ECB event tomorrow afternoon, to celebrate World
Statistics Day.
Two years ago, I concluded my address before this conference saying, "European
policymakers need to have at their disposal a wide array of timely, high-quality statistics on which
to base their decisions". This conclusion has been fully vindicated by the financial and
economic crisis, both globally and in Europe. The necessary strengthening of economic
governance, particularly in the euro area, must go hand-in-hand with enhanced statistics.
The ECB makes extensive use of a wide range of economic and financial statistics. The ECB
is also a producer of selected European statistics for its own decision-making purposes and
for the public at large. The European Parliament and Council have underlined the fact that
European statistics are developed, produced and disseminated by both the European
System of Central Banks (ESCB) and the European Statistical System (ESS).1 To minimise
the reporting burden and enable the efficient development, production and dissemination of
European statistics, it is important to reinforce the close cooperation between the ESCB and
the ESS, and notably to foster the exchange of confidential statistical information between
the two systems for statistical purposes.
I would like to address four themes today: the statistical component of a quantum leap in
euro area economic governance; second, recent ECB initiatives to enhance European
statistics; third statistical information for macro-prudential purposes; and fourth European
statistics as a possible model for global statistics.
1. Statistical implications of a quantum leap in economic surveillance
It is essential to strengthen further the euro area dimension of surveillance and policy
adjustment. In a speech three days ago,2 I reviewed the recent Commission proposals from
a euro area perspective and highlighted where we need more ambition still for the euro area,
in order to safeguard the smooth functioning of our monetary union.
Today, I would like to outline in more detail what we need in terms of the statistical
implications for the "quantum leap" that is needed in economic surveillance. There are
essentially three points.
First, the reliability of the general government statistics underlying the Excessive Deficit
Procedure and the Stability and Growth Pact must be guaranteed when they come out. While
the government finance statistics of the overwhelming majority of the Member States is
reliable, this does not yet apply to all of them. Yet as we are in a highly integrated union, we
need reliable statistics not just from the majority of Member States - we need it from each
and everyone, no matter how large or how small the country is. We have seen that the
potential for loss of credibility affects the entire union.
Therefore, in cases of data deficiencies, the recently amended powers of the Commission
(Eurostat) regarding the quality assessment of statistics in the context of the Excessive
Deficit Procedure must be applied in full. This is best documented in action plans to be
monitored at the European level. Moreover, in terms of both reliability and timeliness,
government finance statistics would benefit in several countries from closer integration of the
budget process, in particular among different parts of general government. Where the
planning, execution and monitoring of public budgets is a well integrated process, reliable
government finance statistics are available almost without delay for decision-makers and the
public at large. Why would GDP, which is an economy-wide concept, be available in a
timelier manner than statistics on general government deficit and debt?
My second point is that there should be mechanisms to ensure that governance and quality
provisions laid down in the European statistics Code of Practice of the ESS3 are fully
adhered to. This is best achieved by reinforcing the binding nature of the European statistics
Code of Practice and enshrining its minimum standards, in particular on professional
independence, in a European legal act. Simultaneously, the alignment of national statistical
legislation with the principles of the Code of Practice and the Regulation on European
statistics4 should be accelerated.
Third, we must have full assurance that the statistical indicators supporting enhanced
macroeconomic surveillance are robust and timely available. We must have assurance that
indicators - such as international indebtedness, unit labour costs and other indicators of
competitiveness - are firmly based on accepted statistical methodologies, ideally already
legislated, and that the degree of estimation in compiling them is limited. Where compiled by
the ESS, the European statistics Code of Practice should apply.
These three points are absolutely essential and it is in the fundamental interest of all euro
area members that they are included in the current upgrade of the economic governance
reform.
2. Recent ECB initiatives to enhance European statistics
Let me recall that the primary objective of the ECB is to maintain price stability, defined as
euro area annual inflation below, but close to, 2% over the medium-term. It is worth noting
that over the first 113⁄4 years of the euro, the average annual euro area inflation has been
1.97%. The ECB is in its 12th year of existence and, as you see, its mandate is fully fulfilled.
Moreover, inflation expectations over the medium to longer term remain firmly anchored in
line with the ECB's objective. This has been an outstanding achievement in the first few
years of Economic and Monetary Union - and it is an achievement to which European
statistics have made an important contribution.
In line with the allocation of responsibilities between the ESCB and the ESS for collecting,
compiling and disseminating European statistics, the monetary analysis of our monetary
policy strategy is mainly supported by statistics compiled by the ESCB5. In 2009 and 2010
the ECB, supported by the national central banks of the Eurosystem, has been implementing
two ECB regulations on enhanced Monetary Financial Institutions' balance sheet statistics
and on securitisation vehicles.6 These regulations introduced reporting requirements for loan
securitisations, in particular, and new statistics on the assets and liabilities of these vehicles.
The aim is to compile more detailed monthly and quarterly data to be published for the first
time in June 2011. In addition, new statistics on euro area money market funds and on other
investment funds, including hedge funds,7 were released in December 2009. Following the
adoption of the new ECB Regulation addressing banks' interest rate statistics,8 the monthly
banks' interest rate statistics are now produced more quickly and are available already one
month after the Governing Council's monetary policy decisions. Further new and enhanced
statistics are being compiled based on data already available at the national level, such as
data from credit registers and supervisory data. A key example is detailed statistics on
insurance companies and pension funds, which are also expected to be published from June
2011 onwards. As you can see, there is considerable and very tangible progress in the area
of monetary and financial statistics. All these developments will contribute to enhanced
monetary analysis and are also available for in-depth financial stability analysis.
The economic analysis of our monetary policy strategy benefits from much more consistent
statistics on the euro area balance of payments. The size of the statistical discrepancy in
balance of payments statistics has been decreasing substantially in recent years. The quality
of these statistics has also improved, in particular by drawing on the Centralised Securities
Database (CSDB),9 Phase 2 of which went live in spring 2009. The CSDB also supports the
compilation of investment fund statistics, the residual maturity of government debt securities
and new statistics on securitisation vehicles. The ECB will publish the results of the third
wave of the joint ECB and European Commission survey on the access to finance of small
and medium-sized enterprises in the euro area later this week, and fieldwork is being carried
out for the Eurosystem survey on household finance and consumption.
The flagship of the cooperation between the ESCB and the ESS on European statistics
remains the quarterly euro area accounts. These provide a consistent statistical framework
for the ECB's monetary and economic analysis, both for transactions and balance sheets.
The euro area accounts are also widely used in the ECB Financial Stability Review. The
main challenge remains more timely delivery, no later than 90 days after the end of the
5
An updated overview of all available ECB statistics has recently been published in "ECB statistics: an
overview". See http://www.ecb.europa.eu/pub/pdf/other/ecbstatisticsanoverview/2010en.pdf.
6
Regulation (EC) No 25/2009 of the ECB of 19 December 2008 concerning the balance sheet of the monetary
financial institutions sector (Recast) (ECB/2008/32) OJ L 15, 20.1.2009, p. 14; and Regulation (EC) No 24/2009
of the ECB of 19 December 2008 concerning statistics on the assets and liabilities of financial vehicle
corporations engaged in securitisation transactions (ECB/2008/30) OJ L 15, 20.1.2009, p. 1.
7
Regulation (EC) No 958/2007 of the ECB of 27 July 2007 concerning statistics on the assets and liabilities of
investment funds (ECB/2007/8) OJ L 211, 14.8.2007, p. 8.
8
Regulation (EC) No 290/2009 of the ECB of 31 March 2009 amending Regulation (EC) No 63/2002
(ECB/2001/18) concerning statistics on interest rates applied by monetary financial institutions to deposits and
loans vis-à-vis households and non-financial corporations (ECB/2009/7) OJ L 94, 8.4.2009, p. 75.
9
See "The 'Centralised Securities Database' in brief", available at http://www.ecb.europa.eu/pub/pdf/other/
centralisedsecuritiesdatabase201002en.pdf.
BIS Review 137/2010
reference quarter. The ECOFIN Council supports this timeliness objective10 and it is my
expectation that the ESCB and the ESS will achieve it by 2014 as currently planned.
In addition to the European statistics provided by the ESCB, the ECB relies, for the purposes
of its monetary policy and particularly for its economic analysis, on a wide range of economic
statistics provided by the ESS. They include, in particular, the Principal European Economic
Indicators that are endorsed by the Economic and Financial Committee (EFC) through its
Status Reports on Information Requirements in EMU. These annual reports are prepared
jointly by Eurostat and the ECB's Directorate General Statistics.11
3. Statistical information for macro-prudential purposes
Let me now turn to statistical information for macro-prudential purposes. The upcoming
launch of the ESRB and the entire ESFS including the three European Supervisory
Authorities will have important statistical implications. When developing the statistical support
needed for the ESRB, we may distinguish between the "input", the "throughput" and the
"output" of the statistics function.
Let me start with the core of the task, which is the "throughput" - namely the compilation of
statistical information. All statistics on the financial institutions, financial markets and financial
market infrastructures of the EU as a whole, including sufficiently granular breakdowns,
depend first and foremost on a sizeable team of statisticians who are well-versed in the legal
provisions to be observed, trained and experienced in the economic and financial stability
requirements, knowledgeable about the statistical concepts and methodology related to data
on the financial system, familiar with the IT infrastructure to be applied, and used to
crossborder cooperation in a European and international environment.
Such a team has been built and maintained by the ECB and the national central banks of the
EU to provide European financial and economic statistics for monetary policy purposes. In
addition, the ESCB statistics function offers sophisticated tools, such as statistical databases,
internationally agreed standards and data transfer formats, registers of financial institutions,
tested procedures for handling confidential data, and an array of proven methodologies and
software for collecting and compiling financial statistics.
The "output" comprises a large number of statistical deliverables needed to support the work
of the ESRB. Much work still needs to be done and it is appropriate that the final statistical
framework for the macro-prudential oversight of the financial system will be decided by the
ESRB. I would like to distinguish between four main types of statistical deliverables.
The first is macro-financial information relating to the macroeconomic environment, financial
market data and information on financial market infrastructures.
The second is macro-prudential information on regulated and unregulated financial
intermediaries. This comprises sufficiently granular aggregated micro-prudential information
across countries and financial sectors, as well as individual information on large financial
intermediaries.
The third type of statistical deliverable is information on exposures to counterparties, which
will draw, in particular, on a securities holdings database containing data on a
security-by-security basis, and will be supported by the CSDB. Detailed and reliable data on
securities issues and holdings are indispensable to any systemic risk assessment. The
CSDB would be best complemented by a public reference data utility providing standardised
information on instruments and entities that would be operated on the basis of an
international agreement.
The fourth type of statistical deliverable is ad hoc information obtained via one-off surveys
where it is undisputed among statisticians that only regular and tested data flows that are
connected to the internal accounting systems of reporting agents limit the reporting burden
with a lasting effect, and produce a timely and reliable output.
Concerning the "input" - namely the collection of data - the reporting burden of financial
institutions could be reduced by improving processes to ensure that information is only
reported once. One example of this streamlining is the use of supervisory data to compile
macro-financial statistics. Here, the ECB and the Committee of European Banking
Supervisors (CEBS) have published a bridging manual aligning the ECB's monetary and
financial statistics requirements with the supervisory reporting templates developed by CEBS
and have created a relational database identifying similarities and differences between the
two frameworks.12
It is even more important to reach a common understanding on the regular flow of data from
the reporting agents in the EU financial system, via national and European databases, to the
ESRB. In this context, I also welcome the fact that the ECB and CEIOPS13 are working on an
optimised usage of the future data reporting by the insurance sector under the Solvency II
Directive14. Clearly, there is a difference between the use of confidential micro-data for
statistical purposes and their use for policy purposes. This distinction is respected in the
dayto-day business of any developed statistics function. To achieve detailed agreements on the
flow of data, I count of a very fruitful cooperation between the three future European
Supervisory Authorities and their predecessors, CEBS, CEIOPS and CESR15 with the ESRB
preparatory Secretariat recently established at the ECB and our Directorate General
Statistics. The statistics departments of the national central banks of the EU Member States
are involved via the ESCB Statistics Committee.
4. European statistics as a model for global statistics
The financial crisis not only had an impact on individual economies and groups of countries;
it also had a global dimension. The Group of Twenty Finance Ministers and Central Bank
Governors (G20) now has a much more important role than it did before the financial crisis. It
established a Working Group on Reinforcing International Cooperation and Promoting
Integrity in Financial Markets that called on the International Monetary Fund (IMF) and the
Financial Stability Board (FSB) to explore information gaps and propose ways to strengthen
data collection. The report of the IMF and the FSB, entitled "The Financial Crisis and
Information Gaps"16, makes 20 high-level recommendations to address the measurement of
risks in the financial sector, international financial linkages and the vulnerability of economies
to shocks, as well as the communication of official statistics and was endorsed by the G20 in
November 2009. I am pleased that this report was produced with significant input from the
ECB.
As new collections of data from reporting agents will be required in most G20 economies to
close information gaps, a multi-year programme, combined with an appropriate governance
framework and sustained policy support, is needed to implement the recommendations. The
G20 have therefore received an action plan in June 2010, detailing the recommendations
and timetables for their implementation. This action plan was welcomed recently also by the
International Monetary and Financial Committee of the IMF Board of Governors.
Although the need for more comprehensive and more comparable statistics extends beyond
the G20 economies, the G20 have volunteered to set an example. Because of the economic
importance of the G20 economies, their data are sufficient to compile reliable and timely key
world aggregates, such as quarterly GDP, within two months of the end of the reference
quarter. Experience in the euro area confirms the traditional statistical paradigm that more
aggregated data, such as euro area or world aggregates, are more reliable than their
component data.
Comparable statistics are important in a globalised world in which decision-makers and the
public at large need to focus not only on their own economy, but also on key partner
economies. I welcome the development of the Principal Global Indicators (PGIs) that will be
comparable for the G20 economies, including the euro area, and which are similar to the
Principal European Economic Indicators for Economic and Monetary Union. The PGI website
maintained by the IMF17 is supported by six other international organisations, including the
ECB.
Conclusions
Let me conclude. Evidence-based decision-making in modern economies is unthinkable
without statistics. This applies a fortiori to monetary and financial stability policies. The
financial crisis has revealed information gaps that we have to close while also preparing
ourselves for future challenges. This is best achieved through creating a wide range of
economic and financial statistics that are mutually consistent, thereby eliminating
contradictory signals due to measurement issues. The main aggregates must be both
reliable and timely, and, in a globalised world, they should be comparable across countries
and economies.
Reliability and timeliness are key for statistics, but may seem to be conflicting objectives.
This is more the case in the short-term, as the production frontier for compiling statistics can
be enhanced in the medium term by a higher degree of automation. The effective and
efficient collection, compilation and dissemination of European statistics requires a well
developed statistical infrastructure, including, most importantly, a team of skilled and
experienced statisticians familiar with European and international cooperation. I take
tomorrow's World Statistics Day as an occasion to remind all of us of the importance of
highquality statistics. They are central to the foundations of public and private sector
decisionmaking throughout our societies.
Thank you for your attention.