Balance of payments seminar with accession countries
Welcoming speech by Eugenio Domingo Solans (ECB), Member of the Governing Council and of the Executive Board of the European Central Bank (ECB), 22 November 2001.
Ladies and Gentlemen,
It is a pleasure for me to welcome you here at the European Central Bank in Frankfurt for this second seminar on balance of payments and international investment position statistics. The ECB organises in Frankfurt other seminars for accession countries in the field of statistics, namely on money and banking and on statistical information systems. It is a continued illustration of the level of effort and resources that the ECB as well as your respective institutions are committed to devote in the context of the accession process. I should like to also mention the importance vested in good statistics by the ECB and its Executive Board and Governing Council.
Let me stress that the ECB's attitude towards accession process is a positive one. In fact, the ECB is conducting a fruitful and constructive dialogue with the central banks of the accession countries at many levels and in many areas. The organisation of today's seminar is just one example for the efforts taken by the ECB to ensure good co-operation. Once a year, the ECB Governing Council meets the Governors and Deputy Governors of the central banks of the accession countries to discuss policy issues related to EU accession. This year's meeting will take place in Berlin in December. In addition, the ECB's seminars have been complemented through the organisation of bilateral visits and seminars. To give you an idea of the significance of this co-operation, let me mention that, only last year, around 300 central banking co-operation activities, including technical assistance, were organised throughout the Eurosystem. The main areas of co-operation have thus far been information systems in general, payment systems, legal issues, statistics, and euro banknotes frontloading outside the euro area. These activities are continuing apace also this year. Furthermore, the ECB is involved in the recently established "Economic dialogue with accession countries", launched by the European Council, which includes issues highly relevant to the ECB such as monetary and exchange rate policies and financial sector developments.
As an illustration, I should like to emphasise that we highly welcome the progress made in introducing the Harmonised Index of Consumer Prices (HICP) in the accession countries; this will help the ECB and the Commission to carry out the tasks involved in assessing convergence and its degree of sustainability as established in Article 109 j(1) of the Treaty on European Union and even more clearly in Article 1 of Protocol No. 6 to the Treaty. The HICP will help the accession countries to compare themselves with the EU and the euro area. Indeed, the HICP is now produced by more than 25 European countries, easing cross-country comparisons across this large group of countries with increasingly closer economic and financial relationships.
Let me now come back to today's topic. The first edition of the balance of payments seminar, last November, was essentially devoted to the presentation by the Balance of Payments and External Reserves Division of the ECB of the institutional setting and of the regulatory framework for its requirements in this particular area of statistics. These requirements refer to the details on balance of payments, international investment position and international reserves statistics that the national central banks of the Member States participating in the common currency have to transmit to the ECB at the various frequencies.
This year, the focus will be more on the review of the developments that have occurred since last year in this field of statistics and on some issues that are currently under discussion in various fora such as the Working Group on Balance of Payments and External Reserves Statistics, the Statistics Committee of the ESCB, the Working Group of Eurostat or the IMF BOP Committee.
In particular, there will be discussions on issues in portfolio investment and the challenges posed to collection systems in this respect, on the definition of standard quality criteria to monitor the quality of statistics at the national level and at the euro area level and on the geographical breakdown of the euro area balance of payments and international investment position aggregates in the future. I have no doubt that the discussions will be lively given the importance of these issues for your own present and future collection systems.
Among the developments that have occurred since last year, a remarkable achievement has to be highlighted in my view: I am speaking of the completion of the so-called Balance of Payments Manual for Accession Countries, in just one year, thanks to the fruitful collaboration between the ECB and the central banks of the accession countries. I would like to express here my warmest congratulations to all of those who contributed to the successful and timely finalisation of this document. Following the example of the so-called B.o.p. Book for the countries of the European Union, the Manual provides a detailed description of the collection systems and compilation practices at work in your countries.
The publication of this Manual, once approved by the Executive Board of the ECB will enhance the information that is already available, in the specific area of balance of payments and international investment position statistics, in the framework of the Special Data Dissemination Standard (SDDS) and the General Dissemination System (GDDS) of the IMF. It can even be seen in the perspective of the more recent initiatives of the IMF: the Data Quality Assessment Framework (DQAF) and the Report on Observance of Standards and Codes (ROSC). Publicly providing transparent and reliable information on the way statistics are compiled and published is a key factor to investors' confidence and financial stability.
As it did for all the EU countries over the last two years or so, the Balance of Payments and External Reserves Division has initiated a programme of bilateral visits to each of the accession countries: three visits have been made in 2001 (Bulgaria, Poland, Hungary). The programme of these visits will probably extend over the next two or three years. As it was the case with the EU countries, the objectives of these visits are essentially to meet colleagues, to get to know each other to ease future contacts, and to gain a thorough understanding of the compilation systems and practices. Moreover, and perhaps even more importantly, these discussions are the opportunity for ECB staff to exchange with their colleagues on developments that are under way in the euro area, on solutions chosen in other countries, on clarification on methodology etc.
I would like to recall that all the work that is being carried out is taking place on a purely voluntary basis. Indeed, your countries adapt to the "acquis communautaire" but the legal obligations only apply when accessing the European Union or, in respect of the Guideline ECB/2000/4, when joining the euro area. Obviously, we are all aware that it is our common interest to prepare the forthcoming enlargement of the European Union and subsequently of the euro area together as best as we can. However, against this background, I would like to express our gratitude for your commitment and the openness of your co-operation, a feature regularly highlighted by my colleagues, especially on the occasion of the visits to your respective central banks.
Among the developments that have occurred recently within the Eurosystem, I would like to mention in particular the improvements to Monetary and Financial Institutions' (MFI) balance sheet statistics. These improvements, which notably concern a monthly sectoral analysis and information on valuation adjustments, will add to the reporting burden of the reporting institutions. I would make two points on this. First, the reporting system has been kept pretty much unchanged in the five years since statistical requirements for Monetary Union were stated in July 1996, and we would intend to keep them unchanged for a further five years from the announcement of these changes. We realise that the costs of implementing statistical changes are high and that reporting agents prefer to make changes in one go and then keep the system stable for some years. Second, we have certainly applied the merits and costs procedure to these enhancements in order to try to achieve the right balance between the benefits of the additional information obtained and the costs resulting from the additional burden incurred. After this procedure we are convinced of the need to improve the MFI balance sheet statistics, which provide the basis for calculating broad money and its counterparts and are essential to fulfil the statistical needs of the ECB.
Interest rates were another area of statistics for which a temporary solution was initially chosen. I mean here rates actually paid and charged by banks on deposits and loans with their private and business customers, not wholesale market rates which can be taken from screens. The transitional approach was to choose ten broadly standard banking products (deposits and loans) and request existing data on these. The results are not fully comparable: in fact a "health warning" in the relevant table in the ECB's Monthly Bulletin advises readers not to pay undue attention to the levels, though recorded changes in the rates may give a useful indication of developments. We are now preparing the steady state to replace this information with data on a larger set of rates on a better defined and more uniform set of instruments. With a direct link to relevant items in the MFI balance sheet, the new data will give us much better information on the way in which changes in the ECB's key interest rates feed through to interest rates which economic agents in the euro area actually encounter, and so affect economic behaviour.
The link with relevant parts in the MFI balance sheets will mean that the new interest rate data will also tell us far more about how changes in the ECB's key rates directly affect economic sectors in the euro area.
By way of conclusion, I would like to thank the colleagues from the national central banks of the euro area and from the central banks of the accession countries who will make contributions to this seminar, to share their experience with you. I am sure that this kind of exchange of information is extremely useful: learning from others' experience can be regarded, so to speak, as a time-saving shortcut to solving problems, avoiding a trials and errors process.
I wish you a very successful seminar.