Benoît Coeuré: Addressing global data availability challenges
Panel remarks by Mr Benoît Coeuré, Member of the Executive Board of the European
Central Bank, at the Eurofi Financial Forum 2015, Luxembourg, 10 September 2015.
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It is a great pleasure for me to participate in this panel alongside such distinguished fellow
speakers. I will share with you my views on remaining data gaps. The closing of those gaps
is essential for the ECB's conduct of monetary policy and the effective implementation of the
ECB's micro-prudential, macro-prudential and financial market oversight functions. I will also
briefly touch on the important subjects of data sharing and data transparency.
However, let me first point out that there are a number of ongoing international initiatives
aimed at improving the information frameworks on which key policy decisions are based.
These have largely been driven by the Data Gaps Initiative (DGI) launched in April 2009,
which supports several G20 projects, such as bilateral and multilateral surveillance, and
initiatives focusing on global systemically important financial institutions.1
As a member of the Inter-Agency Group on Economic and Financial Statistics, the ECB has
been deeply involved in the development and implementation of these recommendations and
strongly supports the second phase of this initiative (DGI-2).
In this context, I would like to mention three important achievements. First, the ECB has
introduced new statistics on securities holdings. These provide very detailed insight into who
holds which securities in the euro area.2 Second, earlier this year, the ECB, together with the
BIS and the IMF, published a "Handbook on Securities Statistics". This enables the collection
of better securities data by clarifying concepts and providing guidance on the harmonised
presentation of securities data. Third, the recent ECB regulation on supervisory financial
information, which will gradually extend reporting requirements to entities that have not yet
been reporting on the basis of FINREP, is one example of where we have closed a data gap
and increased the consistency of data at the same time.
Despite this encouraging progress, serious data gaps, inconsistencies and inefficiencies still
exist in several major policy and supervisory fields. Allow me to briefly mention a few key
examples.
In the field of credit, significant data gaps still exist. The availability of complete and granular
credit register information and corresponding risk parameters is critical in order to assess the
concentration of exposure throughout each banking group across relevant dimensions. The
absence of this information makes it difficult for supervisors to perform stress tests without
collecting additional ad hoc data (as in the case of the European Banking Authority's stress
1
As early as April 2009, the finance ministers and central bank governors of the G20 called on the International
Monetary Fund (IMF) and the Financial Stability Board (FSB) to identify major financial and economic
information gaps that needed to be filled. As a result, a few months later, in September 2009, the IMF and the
FSB presented the report that would launch the Data Gaps Initiative. G20 leaders have pledged to close data
gaps to support financial stability, with those gaps including: data measuring the build-up of risk in the financial
sector (e.g. financial soundness indicators and coverage of risk transfer instruments, including data on the
credit default swap markets); data measuring financial network connections (particularly for systemically
important global financial institutions) and identifying the activities of non-bank financial institutions. It is
important to note that these gaps do not relate solely to banks and insurance companies. Data gaps are also
prevalent in the non-regulated sector.
2
The ESCB's Centralised Securities Database contains reference data on millions of individual securities.
These reference data are linked to a granular database on securities holdings, which allow policy-makers to
assess "who holds what" when it comes to securities. The main euro area sectors and the 26 largest banking
groups holding individual securities are covered. A legislative process aimed at extending the collection to
cover all groups under the ECB's direct supervision is under way.
test). Such additional data requests place a large burden on banks, but also on the
supervisors tasked with handling and ensuring the quality of these ad hoc data. Furthermore,
those ad hoc requests have long lead times and limit supervisors' ability to react quickly to
changes in the financial environment. Thus, credit register information improves overall
monitoring and the ability to react in a changing environment.
There are also large remaining gaps in the field of derivatives, where the ability to monitor
the size of derivatives markets and the interconnections between financial market
infrastructure (FMI) participants is key if we are to successfully assess the risks across them,
especially considering the global nature of these markets and the fragmentation of the FMI
landscape worldwide. Data are widely available, but they are fragmented and reported in a
non-harmonised way.
In the area of bank funding, we are still missing a timely and comprehensive overview of a
bank's access to different funding sources in the money markets and the conditions under
which a bank is able to finance its activity.
We definitely need to gain more insight into the shadow banking sector. This sector is
continuing to expand and increase its share of financial intermediation, including as regards
lending to the real economy. More comprehensive reporting and reliable data on shadow
banking entities and activities will be required in order to extend the macro-prudential
framework to cover the shadow banking sector. The forthcoming EU regulation on securities
financing transactions will be very helpful in this respect.
From a policy perspective, there is also a need to have sufficiently long time series for macro
variables, such as credit growth, but also for micro data (including bank-specific information),
in order to be able to identify the build-up of financial imbalances.
In addition to critical data gaps in terms of scope, there are also plenty of data inefficiencies
and inconsistencies caused by a lack of harmonisation and standardisation. Where
harmonised identifiers do exist, they have not been globally implemented, as in the case of
the Legal Entity Identifier (LEI). This contributes to the current inability to properly integrate
and aggregate existing data in a comprehensive manner and the lack of a consistent
overview of inter linkages and concentration risks in the banking sector and other parts of the
financial system. To this end, standardisation and harmonisation efforts need to be stepped
up, as demonstrated by the ongoing work of the Committee on Payments and Market
Infrastructures (CPMI) and the International Organization of Securities Commissions
(IOSCO).3 When developing globally harmonised identifiers, such as Unique Transaction
Identifiers (UTIs) and Unique Product Identifiers (UPIs), we should rely, wherever possible,
on data standards that already exist (e.g. ISO standards). These efforts are critical to ensure
national, regional and global aggregation where needed (for example, in the case of globally
systemic banks and data on derivatives). In addition, the compulsory use of these standards
for reporting and wide access to a minimum set of standardised identifiers for all
stakeholders is key.
The issues that I have mentioned clearly show that there are serious data gaps in some
areas. Meanwhile, in other areas, data are available, but we have the issue of data sharing
and data transparency. A wide variety of authorities are involved in collecting data, and
efforts are needed at the level of authorities requesting data. Stronger coordination will, over
time, facilitate the integration of data, which are often requested on the basis of a stovepipe
approach and governed by separate legal frameworks. As a result, underlying concepts,
definitions and standards can all vary from dataset to dataset, making the combining of data
very labour-intensive and subject to all kinds of misinterpretation and overlaps. This
endeavour requires political commitment from all stakeholders. It also requires that
authorities collecting data share relevant information with other authorities.
I fully acknowledge the existing constraints and barriers that may currently hamper data
sharing between authorities, such as data confidentiality and the different mandates of
market supervisors, regulators and central banks. However, I think that sharing data among
policy-makers and supervisory authorities is essential. Understanding interconnectedness in
the global financial system and identifying sources of systemic risk were key motivations for
establishing the Financial Stability Forum in 1999.4 Sixteen year after the Tietmeyer Report,
and one crisis later, we're still not there. We need to establish a "circle of trust" bringing
together certain authorities among which data should be shared more easily.5 Authorities
have a duty to overcome the obstacles that are currently preventing the sharing of data and
endeavour to use harmonised data wherever possible.
I am sure the panel will explore these issues in more detail during our discussions.