jan smets : new data needs for monetary policy speech by mr jan smets, governor of the national bank of belgium, at the ninth european central bank conference on statistics, session 1 : new data needs for monetary policy, frankfurt am main, 11 july 2018. * * * reflections on the future of monetary policy may require new data needs i would like to thank the organisers for inviting me to this most interesting conference, and especially this particular session as it really is about the interactions between statistics and the future of monetary policy, a hotly debated topic. some important ( and interrelated ) things have been happening over the last decade or so in the monetary policy landscape. not only have central banks broadened their toolkit to tackle the financial crisis but also the economic world has been faced with structural changes. besides, both the use of new instruments and the availability of new data have spurred advances in monetary policy research. the interplay of these phenomena could potentially have serious implications for the way we think about monetary policy going forward, be it in terms of objectives, instruments, transmission channels or data monitoring. but – and that is the message i want to convey here – to avoid drawing overly hasty conclusions, this requires careful reflection and, in some cases, implies new data needs. only after careful investigation of the issues at stake, can lessons for the future of monetary policy be drawn. in my remarks today, i will focus more specifically on three phenomena that challenge our traditional thinking about monetary policy : first, the role played by heterogeneity – which has been clearly demonstrated by the use of new monetary policy tools ( typically more targeted ) and something which is increasingly documented in economic research and data. second, digitalisation – probably one of the most notable structural economic changes over the last few years – which also opens the door to a new world of data. third, the changing role of the financial sector. i intend to raise a number of questions to foster the debate and hopefully help to structure our thinking. “ how exactly have these challenges called into question the consensus on which monetary policy has been based? how can new data help to identify whether – and to what extent – the practice of monetary policy has changed? more speculatively, can new data help shape a possible " new normal " for monetary policy? ” needless to say, i do not want to provide any definite answers to these key questions ; they have far - reaching implications making it unrealistic to settle all these issues

( of 3 to 5 years ) conduct an in depth evaluation of the vulnerabilities of a country ’ s financial sector and the adequacy of prudential regulation and surveillance. however, the membership could not agree, in a straightforward manner, that financial sector stability was an integral part of fund surveillance, and therefore mandatory. the technical assistance nature of fsaps was used by some countries to argue that the fund should prioritise its resources to countries less equipped to conduct sound financial sector policies. as a consequence, some major systemically important financial sectors that proved very vulnerable did not undergo a timely and sufficiently in - depth scrutiny. last tuesday, the imf board decided that the 25 countries with a systemically important financial sector will undergo at least every 5 years an in - depth assessment of their financial sector. moreover, the board has stressed that financial sector policies are important in all cases of bilateral surveillance. this is a significant progress. multilateral surveillance bilateral surveillance, understandably, focuses on how national policies must be conducted in the country ’ s best interest. the premise is simple : if each country achieves internal stability and a sustainable external position without manipulating exchange rates, the system as a whole will function satisfactorily. while this remains largely valid, trade and financial integration and economic interdependence are now so far advanced that national economic interests must be pursued in a shared framework of collective stability. national policies pursued in the country ’ s own best ( short term ) interest might not be collectively consistent. the problem of the persistent global imbalances is an important example. to complement bilateral surveillance, the fund must formulate policy - oriented advice on how to improve the coherence of national policies toward improved collective stability and sustainable global growth. a promising proposal that has been floated recently is the production of spillover reports. it is to be welcomed that the fund plans to prepare, on a trial basis over the next year, at least three spillover reports for the us, the euro area and china. these reports will focus on outward spillovers of domestic policies of these economies and would involve not only the authorities of these economies ( akin to the contact for the regular article iv consultations ) but also the authorities of the economies affected by the policies. the launch of the first mutual assessment process ( map ) by the g20, in collaboration with the imf, is a new attempt at multilateral cooperation and coordination. given the potential benefits, this objective