Ladies and Gentlemen,
It is a great pleasure to welcome you to the 7th biennial ECB’s Statistics Conference.
At the previous Statistics Conference, in April 2012, the focus was on the then remarkable expansion of the ECB’s functions and their impact on ECB statistics. In addition to its primary function of maintaining price stability, the ECB had taken over new tasks relating to financial stability and supporting the European Systemic Risk Board (ESRB). Statistics departments in the ESCB and beyond were challenged to respond to the increasing information demands for conducting the monetary policy of the euro area in turbulent times as well as for responding to the data needs for monitoring and mitigating systemic risks.
Two years look now such a long time. As of 4th November, the ECB will also be responsible for banking supervision in the euro area and Statistics departments have yet another partner to serve.
In these last two years, I have witnessed again, the efforts you made in providing monetary, macro-prudential and now also micro-prudential policy-making with the necessary information. I congratulate all the colleagues involved from Statistics, from the IT departments and from Supervision for what has been achieved in so little time. In particular, the statistics function of the ESCB has effectively used its solid knowhow and well-functioning network to create the necessary data hubs and ensure that the flow of supervisory data within the system is as efficient and timely as it has been for the more traditional functions of the ECB. Well done!
The need for integrating statistical and supervisory data
But it should also be clear to everyone that we are now standing only at the start of a long road in terms of data. The big challenge for Statistics in the coming years is not only “many more numbers”, but perhaps much more so, the reconciliation of statistical information collected in support of monetary policy and financial stability with the up-to-now rather separate world of supervisory information. It is one thing to have information, which, like blood, flows through the veins of the system, it is another to ensure that everything beats at the same rhythm and all organs in the body get all they need from the same single flow.
Statistics produced by Central Banks and supervisory data have so far lived in different realms. They capture similar phenomena but often using somewhat different concepts and different reporting frameworks. This will need to change. We cannot afford to have two, somewhat truncated and somewhat incompatible views of the world. It is detrimental to policy making, it is costly to the reporting agents and it undermines the trust to the financial system. Policy making and, indeed, decision making is only as good as the information it is based upon.
An integration of the ECB statistical and supervisory data world will require painstaking work. One needs to go back to the drawing board and design a common European reporting framework that will serve all ECB functions, an information model and a data dictionary that will allow data for different final uses to be collected and processed in one coherent process, of course always respecting the rules of confidentiality. It will also require changes in legal texts, IT infrastructures and, not least, mentality. The sense of narrow “ownership” of the information by the final user may have been entrenched over years of separate existence of the statistical and supervisory data, but should be challenged.
In this ambitious endeavour, smooth collaboration not only within the ESCB and SSM but also with other institutions and bodies is crucial. First and above this regards the ESRB, the European Banking Authority and the European Commission, but also the other European authorities, the Financial Stability Board, the Bank of International Settlements.
Last but by no means least, statistical and supervisory data integration requires very close collaboration with the banks that are the main reporting institutions. Data integration on the side of the ECB and the other authorities only comes at the end of a data production process the first input of which is in the internal systems of the banks. The ECB has every interest to facilitate and promote integration and standardisation also on the “input side”, in the internal systems of the banks, for only this will ensure coherent information.
Benefits of data integration
The benefits of gradually integrating the existing information systems into a harmonised European information system cannot be overstated.
First, it ensures consistency in the information received by different policy makers for different purposes.
Second, ideally asking every piece of information only once will help limit the burden of reporting agents.
Third, it allows the exploitation of synergies across information domains and permits further rationalising of the data production processes both at the reporting banks and at the relevant Authorities.
Fourth, it enriches the basis for policy decision making, respecting the separation of different policy domains.
There are however several constraints to data integration and they will need to be overcome in a stepwise approach because of their sometimes strong historical and cultural nature. Discrepancies due to different accounting standards and legal barriers preventing data sharing among institutions and even within the same institution must be overcome with proper transition periods. Also, integrating flows of micro-data from many sources across the world and analysing them effectively in a timely fashion must be enabled through the broad adoption, at global level, of data standards such as the Global Legal Entity Identifer, which is now operational.
The challenges are manifold - legal, cultural, technological, as well as organisational - but they can be overcome. I am encouraged by the fact that the Statistics Committee of the ESCB is full heartedly backing change in this respect and is spearheading a programme that can lead to the desired integration in the world of data and information.
At the start of the economic and financial crisis, the case of Lehman Brothers gave us an important lesson: the risks of having only truncated information sets available for decision making are huge. I often hear that the coming of the Single Supervisory Mechanism represents a great challenge and a big opportunity to improve the information available for policy making. I would put it somewhat stronger than this. There is an absolute necessity to reap all benefits of an integration of the statistical and supervisory data world in order to be able to understand in a timely manner complex economic relations and developments.
I am looking forward to the contribution of this conference to this common goal.
Thank you for your attention.