jose manuel gonzalez - paramo : future challenges for central bank statistics speech by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, at the sixth ecb statistics conference, frankfurt am main, 18 april 2012. * * * 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

i emphasized the way this relationship balances independence and accountability. but the relationship between the central bank and the rest of government typically has four dimensions. first, the legislature will usually limit central - bank independence by imposing a mandate – a specific set of responsibilities or objectives. second, the legislature will often ensure instrument independence for the central bank, thus insulating monetary policy from the short - term political pressures related to the electoral cycle. the mandate and instrument independence usually reflect formal institutional arrangements, typically set by statute ( or, in the case of the ecb, by international treaty ). third, the central bank will typically engage the legislative and executive branches in a variety of informal interactions. such informal relationships may play a particularly important role in facilitating the coordination of monetary and fiscal policies and, in the case of the legislature, also allow for appropriate oversight. fourth, the legislature typically establishes procedures to hold the central bank accountable for its policy decisions. as i noted in my earlier paper, instrument independence can appear inconsistent with democratic ideals. therefore, there is generally an attempt to balance independence and accountability. this provides incentives for good performance and maintains the connection between the monetary policy process and publicly elected government officials. it is important to appreciate that steps to encourage accountability typically offer opportunities for political pressure. the history of the federal reserve's relationship with the rest of government is marked by efforts by the rest of government both to foster central - bank independence and to exert political pressure on monetary policy. the mandate let me comment briefly on each of these relationships. the mandate is, of course, central to the conduct of policy, or, at least, it should be. the fed's dual mandate – full employment and price stability – is really quite unique. actually, the specific language of the mandate is that the fed should promote price stability and maximum employment. we presume that the congress did not intend to give us contradictory objectives, so we interpret the objectives as price stability and maximum sustainable employment. maximum sustainable employment is also sometimes referred to as full employment, the maximum level of employment sustainable without upward pressure on inflation. the key to the dual mandate is that the two objectives are sought at the same time, though the relative weights are left to the discretion of the central bank. canada, great britain, and the ecb, on the other hand, all have hierarchical mandates that single out price stability as the principal objective and allow the central bank to pursue other objectives only after the price stability objective has been achieved. central