10 September 2015

ECB: Addressing global data availability challenges

In his speech, ECB's Cœuré argues that the closing of global data availability gaps is essential for the ECB’s conduct of monetary policy and the effective implementation of the ECB’s micro-prudential, macro-prudential and financial market oversight functions.

Panel remarks by Benoît Cœuré, Member of the Executive Board of the ECB, at the Eurofi Financial Forum 2015, Luxembourg, 10 September 2015

[...] let me first point out that there are a number of ongoing international initiatives aimed at improving the information frameworks on which key policy decisions are based. These have largely been driven by the Data Gaps Initiative (DGI) launched in April 2009, which supports several G20 projects, such as bilateral and multilateral surveillance, and initiatives focusing on global systemically important financial institutions. 

As a member of the Inter-Agency Group on Economic and Financial Statistics, the ECB has been deeply involved in the development and implementation of these recommendations and strongly supports the second phase of this initiative (DGI-2).

In this context, I would like to mention three important achievements. First, the ECB has introduced new statistics on securities holdings. These provide very detailed insight into who holds which securities in the euro area. Second, earlier this year, the ECB, together with the BIS and the IMF, published a “Handbook on Securities Statistics”. This enables the collection of better securities data by clarifying concepts and providing guidance on the harmonised presentation of securities data. Third, the recent ECB regulation on supervisory financial information, which will gradually extend reporting requirements to entities that have not yet been reporting on the basis of FINREP, is one example of where we have closed a data gap and increased the consistency of data at the same time.

Despite this encouraging progress, serious data gaps, inconsistencies and inefficiencies still exist in several major policy and supervisory fields. Allow me to briefly mention a few key examples.

In the field of credit, significant data gaps still exist. The availability of complete and granular credit register information and corresponding risk parameters is critical in order to assess the concentration of exposure throughout each banking group across relevant dimensions. The absence of this information makes it difficult for supervisors to perform stress tests without collecting additional ad hoc data (as in the case of the European Banking Authority’s stress test). [...]

There are also large remaining gaps in the field of derivatives, where the ability to monitor the size of derivatives markets and the interconnections between financial market infrastructure (FMI) participants is key if we are to successfully assess the risks across them, especially considering the global nature of these markets and the fragmentation of the FMI landscape worldwide. Data are widely available, but they are fragmented and reported in a non-harmonised way.

In the area of bank funding, we are still missing a timely and comprehensive overview of a bank’s access to different funding sources in the money markets and the conditions under which a bank is able to finance its activity.

We definitely need to gain more insight into the shadow banking sector. This sector is continuing to expand and increase its share of financial intermediation, including as regards lending to the real economy. More comprehensive reporting and reliable data on shadow banking entities and activities will be required in order to extend the macro-prudential framework to cover the shadow banking sector. The forthcoming EU regulation on securities financing transactions will be very helpful in this respect.

From a policy perspective, there is also a need to have sufficiently long time series for macro variables, such as credit growth, but also for micro data (including bank-specific information), in order to be able to identify the build-up of financial imbalances.

In addition to critical data gaps in terms of scope, there are also plenty of data inefficiencies and inconsistencies caused by a lack of harmonisation and standardisation. Where harmonised identifiers do exist, they have not been globally implemented, as in the case of the Legal Entity Identifier (LEI). This contributes to the current inability to properly integrate and aggregate existing data in a comprehensive manner and the lack of a consistent overview of inter linkages and concentration risks in the banking sector and other parts of the financial system. To this end, standardisation and harmonisation efforts need to be stepped up, as demonstrated by the ongoing work of the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO). When developing globally harmonised identifiers, such as Unique Transaction Identifiers (UTIs) and Unique Product Identifiers (UPIs), we should rely, wherever possible, on data standards that already exist (e.g. ISO standards). These efforts are critical to ensure national, regional and global aggregation where needed (for example, in the case of globally systemic banks and data on derivatives). In addition, the compulsory use of these standards for reporting and wide access to a minimum set of standardised identifiers for all stakeholders is key.

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Full speech

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