José Manuel González-Páramo: Future challenges for central bank
statistics
Speech by Mr José Manuel González-Páramo, Member of the Executive Board of the
European Central Bank, at the Sixth ECB Statistics Conference, Frankfurt am Main,
18 April 2012.
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Ladies and gentlemen,
On behalf of the Executive Board of the European Central Bank (ECB), let me warmly thank
you for your attendance at and valuable contributions to the sixth ECB Statistics Conference.
Please allow me to make a few concluding remarks before the end of this successful event.
This is the last time that I will be able to attend this conference as a member of the Executive
Board of the ECB and I greatly appreciate this opportunity to address such a distinguished
audience.
As the media and the markets repeatedly remind us every day, there is much at stake as
regards the future of the European project today. Indeed, the credibility of European
integration is being challenged for reasons that no responsible policy-maker can afford to
disregard. Although the European System of Central Banks (ESCB) has been successful in
achieving its main objective, which is to maintain price stability, let us not forget that, under
Article 3 of the Statute of the ESCB and of the ECB, the ESCB is also responsible for
contributing to the stability of the financial system. This is why I greatly appreciate the focus
and title chosen for this conference, which reflect the contribution of central banking statistics
to both the maintenance of price stability and the mitigation of systemic risks.
The system and processes for producing statistics that are used directly for monetary policy
purposes are well advanced in terms of their accuracy, timeliness and coverage. The
compelling question is therefore whether these statistics could also serve the needs of
financial stability policies and macro-prudential supervision. As you very well know, the
answer to this question is "yes, but with some limitations", or rather "yes, but the data
currently available are not sufficient". Rather than being discouraged by this, I would call
upon you to accept this shortcoming as a challenge to be taken up in your future work.
But what exactly are the most pressing challenges that we face in this area?
As you have already discussed in detail throughout the conference, monetary statistics tend
to provide us with aggregated data. There are, of course, very good reasons why this is the
case, but for the purposes of macro-prudential analysis, it would be more useful if the data
were also consolidated at the level of individual banking groups. In addition, not only banks,
but also insurance companies, pension funds and ideally the entire financial system,
including the shadow banking sector, should be covered in order to effectively help
policymakers identify potential sources of systemic risk. Furthermore, data with sufficient
granularity are instrumental in macro-prudential analysis in order to take both averages and
distributions into account. In turn, the microfoundations of aggregates must be explored. In
seeking ways to overcome these shortcomings, I am impressed by the convincing and - in
fact converging - arguments, proposals and suggestions that have emerged during the
discussions at this conference.
When considering the different ways in which we can try to close the existing data or
information gaps, there are essentially three options: i) launch a new data collection effort;
ii) make better use of existing data; and, perhaps most importantly, iii) revisit the data
collection processes that are currently in place. We are fully aware that, irrespective of
whether the first or second options are adopted, we will in any case have to review our
existing data collection processes.
As regards the collection of new data, it is widely agreed that we cannot merely impose
additional reporting requirements on reporting agents - irrespective of the size of the data
gaps that we need to fill - before having thoroughly considered all other possible alternative
solutions. While an overall increase in the reporting burden may well be justified in individual
cases, insofar as it is clearly supported by a cost-benefit analysis, this should only be the last
resort after all other options have been exhausted.
For instance, concerning the issue of how to make better use of the existing data, work is
under way to help reduce the number of overlapping data collection efforts. A prominent
example of this is the work being carried out under the auspices of the ECB and the
European Banking Authority (EBA) to reconcile credit institutions' statistical and supervisory
reporting requirements. In this context, I would like to recall that the second version of the
classification system linking the requirements of the ECB's monetary and financial statistics
with the supervisory reporting templates (FINREP, COREP and Large Exposures) developed
by the EBA was published last month on the websites of both the ECB and the EBA.
I welcome and encourage all initiatives to review our data collection processes in a
comprehensive way. A strategic shift towards granular, multi-purpose data collection and
more integrated data production processes can effectively reduce the burden on reporting
agents and, at the same time, deliver more information to data users. Indeed, in attempting
to collect more micro data (such as through the ongoing Eurosystem project to collect
securities holding statistics on a security-by-security basis), we will face the challenge of
finding ways to adapt more flexibly to new user demands without imposing additional
reporting requirements on data reporting agents. These efforts should be reinforced by
establishing harmonised data collection frameworks common to central banks and
supervisory authorities. The trade-off between the reporting burden and the amount of
information available has to be tackled at its roots, owing to the ever-growing likelihood of
additional, unforeseeable requests for data on an ad hoc or regular basis. Multi-purpose data
collection offers a viable solution to this problem and, given the present scarcity of resources,
there is virtually no alternative avenue to enable central banking statistics to successfully
serve both Eurosystem mandates. Any belief to the contrary will, in my opinion, inevitably
meet with disappointment.
This type of approach should not be pursued only by statisticians. The importance of having
an adequate legal framework for sharing with statisticians confidential data collected for
supervisory purposes should not be underestimated. Indeed, the legal framework
empowering the ECB to collect data is designed to allow the exchange of confidential
information within the ESCB in order to compile statistics. Statisticians are well aware of the
need to protect data confidentiality and have strict procedures in place to safeguard the
confidentiality of all types of information used in their statistical compilation processes. Legal
obstacles, however, still remain in the case of data collected from reporting agents for other
purposes, such as supervisory purposes. Within the existing European supervisory
architecture, confidential information is not only collected by the various competent national
authorities that may share information with the European Supervisory Authorities but is also
collected and exchanged on the basis of a wide range of legal acts, each with their own
different characteristics. In practice, this framework does not facilitate the smooth exchange
of confidential information. This is why I am very supportive of any change in the legislation
which is aimed at facilitating such exchanges but which at the same time ensures strict
protection procedures for confidential data. I cannot stress enough the importance of this.
Confidentiality issues are of course ever-present in these discussions and, to a certain
extent, hinder progress. This could partly be attributed to a European tradition which attaches
great importance to keeping supervisory information confidential, and which stands in
contrast to traditions on the other side of the Atlantic, such as those reflected in the practices
of the US Federal Financial Institutions Examinations Council, which publishes a wider range
of supervisory information on banking institutions operating in the US market. We fully
respect legitimate reasons for keeping certain information confidential, but would also call for
more transparency towards market analysts and financial market participants. In any event,
such a call for more transparency does not obviate the importance of having a more
sophisticated legal framework and practical arrangements for sharing confidential data
among the relevant authorities in order to support their respective tasks. The purpose of such
a legal framework and arrangements must be to avoid duplication of data requests, to reduce
the reporting burden, and to ensure that policy actions by decision-makers are not rendered
ineffective owing to lack of access to information that has already been collected. Hence, I
count on the support of the European and national authorities, as well as the industry, to
strive for this common goal and overcome confidentiality constraints and obstacles to the
exchange of data to support the tasks of decision-makers.
Concerning economic data, we have seen evidence of the need for further work on the
development of these statistics, as they are now increasingly coming under scrutiny from
policy-makers and financial market participants. The excessive deficit procedure mechanism
and the new alert mechanism put in place by the European Commission to detect and
correct macro-economic imbalances on the basis of a scoreboard of indicators are adding
pressure on statisticians to deliver high quality data. In this context I would like to stress the
importance of establishing good cooperation between central banks and national statistical
institutes, both at the EU and the national level.
I would like to conclude my remarks today by assuring you that the ESCB will further develop
its statistics so as to better fulfil the mandates given to the ECB and to the European
Systemic Risk Board.
The sixth ECB Statistics Conference is coming to an end. The last session will take place
after lunch at which Peter Bull will present his book on ESCB statistics to mark the
20th anniversary of the ESCB Statistics Committee
Ladies and gentlemen, allow me to finish by thanking the chairs, the speakers, the
discussants and the many distinguished participants in this conference. You have provided
excellent contributions and reflections on strategic issues for the future development of
ESCB statistics. It has been a very good opportunity to enhance our cooperation and to
identify challenges to the supply of timely, relevant and reliable statistics for both monetary
policy and financial stability purposes. I hope that our fruitful cooperation will continue in the
future.
Thank you very much for your attention.