nout wellink : the business cycle in perspective address by mr nout wellink, president of de nederlandsche bank and president of the bank for international settlements, on the occasion of akzonobel ’ s new year ’ s function for its management, 8 january 2003. * * * you are of course familiar with the phenomenon of perspective distortion, which makes things close by look bigger. interestingly, the effect becomes less strong as the distance from onlooker to object increases. similarly, a certain distance in time is often required in order to put things in their right perspective. this is why historians so seldom discuss events of less than several decades ago. economists and policy makers, however, cannot afford to keep that much distance. and by consequence, much of what they write and say shows the effects of perspective distortion : the current recession invariably looks greater than the previous one. architects in 15th century florence discovered how to draw a correct perspective. much later, the architects designing the building of the nederlandsche bank used this knowledge : by making the tiles that line the outside of the building larger for higher stories, they cancelled out the distortion in the eye of the observer below. today, i have set myself the ambitious goal of putting the business cycle in perspective. i intend to regard recent cyclical developments in the light of preceding business cycles. this gathering presents an eminent opportunity to discuss the international and dutch business cycles, for akzonobel is an international concern - active in 80 countries. but you are also a dutch company, with its head office established here and almost 20 per cent of production concentrated in this country. at the same time, i suspect that akzonobel has a greater than average interest in the analysis of cyclical developments : an important part of the firm ’ s activities - basic chemicals - may be characterised as early cyclical. for us, incidentally, this makes companies in this sector interesting, because they provide a leading indicator for the business cycle. the economic slowdown since the year 2000 has so far been roughly simultaneous in europe and north america. it has often been claimed that this is the result of the increasing economic intertwinement of both large blocks. that increase can, of course, hardly be denied. world trade today represents 17 % of global production, against only 8 % in 1914. and this excludes the increased internationalisation of businesses, through the establishment of branches and plants abroad and through cross - border mergers. also highly visible

core transaction details of all otc derivatives are kept and stored by trade repositories all using the same high - quality data model, the reporting burden will not just cease to grow ; it will even decrease, as the trdata may then serve various regulators. and we, as fsb, will be able to ascertain precisely which transactions have taken place, and how exactly they should be aggregated, which now can still be ‘ a bit of problem ’. we can only measure the size of a global market if we use a uniform measuring method everywhere, thus ruling out the risk of double - counting owing to a lack of unique numbering or overlapping product definitions. it being a foregone conclusion that further use of bad data quality will only add to the regulatory reporting burden, we must lose no time and join forces, not only to enhance the quality of the data used in the trade reporting, but also to ensure they are globally consistent. and that is why you are here today! this is where you come in! for uti is a critical data element in making the global otc derivatives markets transparent. for this reason it is vital that you, the regulators and private sector representatives gathered in this room, are going to pay particular attention today to the governance aspects of the uti. as you will no doubt be aware, work on the governance of the uti is already underway. last month, the fsb launched a consultation on proposed governance arrangements for the uti. later this year, similar proposals for the unique product identifier will be put out for consultation. but, welcome as this development may be, i would add that the proposed arrangements should be considered with great care. for, as probably no one knows better than you, the world of hedging and related derivatives is changing continuously. governance mechanisms must therefore be designed to ensure that the reporting framework can cope with those changes in order maintain a high data quality level. i hope that with this caveat in the back of your minds, you will collaborate successfully in today ’ s workshop. and that you will do so in the knowledge that the fruit of your efforts will be for the benefit of both the private and public sectors, both authorities and counterparties, if only by helping to reduce the reporting burden. as a member of the fsb, i would like to thank you in advance for your effort to make our work easier and – possibly – more effective! thank you.