sharon donnery : the importance of data - statistics during the pandemic and beyond opening remarks by ms sharon donnery, deputy governor of the central bank of ireland, at the central bank of ireland webinar " the importance of data : statistics during the pandemic and beyond ", 7 october 2021. * * * i would like to welcome everyone this afternoon to our conference on the important role of statistics in economic analysis and policymaking, and what lessons we can take from the pandemic period to support us in our future challenges. evidence - based policymaking is key for the central bank and, of course, high quality data provides the foundation for this approach. in addition, part of our statutory role involves producing high quality financial statistics, both for our own analysis but also as a public good. we disseminate our data and analysis through various publications, seminars and through ongoing interactions with government departments, academia and commentators. it is highly important to us to be a trusted and credible source for our users domestically and further afield. improvements to statistics in recent years one of my very last pre - pandemic speeches was at the sixth household finance and consumption conference in december 2019. 1 my focus then was very much on marking the significant progress made by the statistical community over the previous decade in response to the financial crisis. we saw substantial national and international efforts to build better quality, more comprehensive, flexible and integrated statistics. international cooperation is crucial for further progress including identifying data gaps, building areas of speciality and developing platforms to share ideas in a world that is becoming ever more interconnected. within the central bank we have being developing key skills to integrate granular data into our decision making and existing risk assessment frameworks. local initiatives covering credit risk and borrower resilience such as the central credit register and european initiatives such as anacredit along with insights on capital market financing from securities statistics have emerged as important tools in supporting decision making within the central bank. our data and analyses also support decisions and public policy on a range of topics impacting households and businesses, most notably with the establishment of irish national claims information database in 2019, as well as ongoing data sharing with the central statistics office for the purposes of national accounts, amongst other things. to future - proof our data as the economy and financial sector evolves, we were also feeding into work on establishing harmonised statistics on distributional financial accounts, occupational pensions and the innovations in payments at the european level, amongst others

##uter does not bear the costs it inflicts on others, a fee should be imposed on the polluter. the financial system is also exposed to such external effects, which we could perhaps call pollution. the external effects can be classified by the resulting symptom ; excessive risk or excessive credit. moral hazard arises when a bank ’ s owners take a big gamble with creditors ’ money. while the owners might earn a huge profit by investing depositors ’ savings, depositors will never earn more than the interest on their deposits. as long as the owner takes the upside and the depositor is left with the downside, the bank has an incentive to take greater risk than socially desirable. the distortion is amplified by deposit guarantees or public guarantees. when many banks or big banks play moral hazard, risk in the financial system becomes excessive. thomas kuhn uses in his book the structure of scientific revolutions ( 1962 ) this statement from max plancks scientific autobiography and other papers ( 1949 ). jorda, oscar, moritz schularick, and alan m. taylor, “ when credit bites back ”, journal of money, credit and banking, 2013, 45, pp 3 – 28. bis central bankers ’ speeches contagion effects between banks can also lead to a vulnerable financial system. banks lend each other money in interbank markets and can become more closely intertwined than is socially desirable. losses at one bank can spread through the system, creating a domino effect. the contagion effect can also be indirect. when a bank has to sell assets to redeem debt, the value of equivalent assets of other banks decline, as many experienced during the financial crisis. individual banks do not have an incentive to take into account a fall in value that it inflicts on its counterparties. contagion effects are externalities between banks that can lead to a situation where the risk in the financial system becomes greater than the sum of what individual banks believe their risk to be. over the past years, i have travelled around the country and visited many savings banks in norway, and without exception they report that risk management has improved considerably at their banks. that is no doubt true, but i cannot without a doubt conclude on that basis that systemic risk has been fully eliminated. herd behaviour amplifies risk in the financial system. the more banks ’ portfolios are alike, the more they are exposed to indirect contagion through a fall in the market value of their portfolios. when banks have similar