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Statistics and Their Use for Monetary and Economic Policy-Making STATISTICS AND THEIR USE FOR MONETARY AND ECONOMIC POLICY-MAKING SECOND ECB CONFERENCE ON STATISTICS 22 and 23 April 2004 EUROPEAN CENTRAL BANKEUROPEAN AND THEIR USE FOR MONETARY AND ECONOMIC POLICY-MAKING STATISTICS 382699_ECB_Statistics.qxd 02-03-2005 15:50 Pagina 1 STATISTICS AND THEIR USE FOR MONETARY AND ECONOMIC POLICY-MAKING SECOND ECB CONFERENCE ON STATISTICS 22 and 23 April 2004 This publication is dedicated to the memory of the late Mr. Eugenio Domingo Solans, former member of the Executive Board of the ECB. Published by: © European Central Bank, 2004 Address Kaiserstrasse 29 60311 Frankfurt am Main Germany Postal address Postfach 16 03 19 60066 Frankfurt am Main Germany Telephone +49 69 1344 0 Internet http://www.ecb.int Fax +49 69 1344 6000 Telex 411 144 ecb d All rights reserved. Reproduction for educational and non-commercial purposes is permitted provided that the source is acknowledged. The views expressed in this publication do not necessarily reflect those of the European Central Bank or of any other institutions with which the authors are affiliated. ISBN 92-9181-519-5 (print) ISBN 92-9181-520-9 (online) Contents Foreword by Jean-Claude Trichet . 7 A bird’s eye view of the conference: summary of contributions by Steven Keuning . 9 Conference programme . 25 Euro area statistics and their use for ECB policy-making: opening address by Jean-Claude Trichet . 29 I Statistics for monetary policy and financial stability purposes . 39 The art of central banking requires more than just intuition by Wolfgang Duchatczek and Aurel Schubert . 39 Statistics for financial stability purposes by Hermann Remsperger . 55 Comment Christa Randzio-Plath . 63 Discussion summary . 71 II Business accounting standards and statistical standards . 73 Introduction by Nout Wellink . 73 Round table discussion . 79 Carol S. Carson Jean Cordier Paul Rutteman Klaus Pohle Discussion summary . 87 III Policy uses and future developments in balance of payments statistics . 93 How does globalisation affect the use of balance of payments statistics for policy purposes? by José Viñals . 93 4 Policy uses of and future developments in balance of payments statistics: some European perspectives by Sinikka Salo . 117 Comment Vítor Gaspar . 127 Discussion summary . 131 IV Economic and financial accounts for monetary and economic policy . 133 The use of economic and financial accounting in the conduct of monetary policy by David J. Stockton . 133 Economic and financial accounts for monetary and economic policy by György Sándor . 145 Comment Luigi Federico Signorini . 157 Discussion summary . 171 V International statistics: quality and policy issues . 173 Statistics and politics by Michel Vanden Abeele . 173 The quality of international statistics: outstanding issues and proposals for improvement by Enrico Giovannini . 181 Comment Gert Jan Hogeweg . 201 Discussion summary . 207 Statistics and their use by central banks: closing remarks by Eugenio Domingo Solans . 209 Discussion summary . 215 Contributors . 217 Abbreviations . 219 5 6 This publication is dedicated to the memory of the late Mr Eugenio Domingo Solans. Mr Domingo Solans was a member of the Executive Board of the ECB from June 1998 to May 2004. Foreword The Second ECB Conference on Statistics, which was held in April 2004, has served two main purposes. First, a wide range of policy-makers, including a number of ECB Governing Council Members, were able to review the statistical requirements for central bank policy-making. Second, it provided the statistical community with an opportunity to bid farewell to Eugenio Domingo Solans, the Executive Board Member responsible for statistics, who left the ECB at the end of May 2004. As the basic statistical requirements of the ECB have been met under the guidance of Eugenio Domingo Solans, it was a good moment to invite central bank policy-makers to look ahead and to identify their most pressing unfulfilled statistical needs. At the same time, the timing of the conference – just a few days before the historical expansion of the European Union (EU) to incorporate 10 new Member States – could hardly have been more appropriate. From now on, the representatives of those Member States will be fully involved in the statistics developed, compiled and disseminated by the ECB. The conference centred on several of the core objectives for ECB statistics that have been identified in its medium-term strategy: • Statistics for monetary policy and financial stability purposes; • Business accounting standards and statistical standards; • Policy uses and future developments in balance of payments statistics; • Economic and financial accounts for monetary and economic policy; • International statistics: quality and policy issues. The closing address was given by the ECB Executive Board Member in charge of statistics, Eugenio Domingo Solans. In his speech, he drew upon his experience at the ECB, describing the remarkable development of European economic and financial statistics in the past years as a “silent revolution”. The ultimate objectives, however, should be firstly to move from a good European statistical system to a better one by shifting its focus from national statistics to euro area statistics, and secondly, to reach a similar degree of statistical harmonisation among large economic areas as there is currently within them. I am sure that the new ECB Executive Board Member in charge of statistics, José Manuel González-Páramo, will build on the excellent achievements of his predecessor, and I strongly believe that the success of the second biannual ECB conference on statistics is worth repeating. Eugenio Domingo Solans passed away on 9 November, only a few weeks before the publication of the present proceedings. This book is dedicated to his memory. Jean-Claude Trichet President 8 A bird’s eye view of the conference: summary of contributions Steven Keuning The Second ECB Conference on Statistics has served to review the statistical requirements for central bank policy-making. At the same time, it has provided the statistical community with an opportunity to bid farewell to Eugenio Domingo Solans, the Executive Board Member responsible for statistics, who left the ECB at the end of May 2004 and sadly passed away in November of that year. Besides this, as the basic statistical requirements of the ECB have been met under the guidance of Mr Solans, it was a good moment to invite central bank policy-makers to look ahead and to identify their most pressing unfulfilled statistical needs.1 The timing of the conference was indeed highly appropriate, as it took place just a few days before the historical expansion of the EU to incorporate 10 new Member States. From now on, the representatives of those Member States will be fully involved in the statistics developed, compiled and disseminated by the ECB. This introduction provides a bird’s eye view of the contributions and discussions that are contained in the rest of this volume. These contributions can be grouped into seven parts. First, ECB President Jean-Claude Trichet provided his views on the subject ‘Euro area statistics and their use for ECB policy-making’. Thereafter, the conference discussed five themes: I. Statistics for monetary policy and financial stability purposes; II. Business accounting standards and statistical standards; III. Policy uses and future developments in balance of payments statistics; IV. Economic and financial accounts for monetary and economic policy; V. International statistics: quality and policy issues. Finally, Mr Solans, ECB Executive Board Member in charge of statistics, delivered a closing address on the topic ‘Statistics and their use by central banks’. The President of the ECB, Jean-Claude Trichet, started his opening address on Euro area statistics and their use for ECB policy-making by stating that the importance of official monetary, financial and other economic statistics for the ECB’s monetary policy should not be underestimated. As statistics provide the foundation for economic analysis and policy-making, the availability of trustworthy and timely statistical time series is a prerequisite for an effective and correct assessment of the monetary and economic situation and future prospects. Moreover, economic agents also use these statistics for their decisions, which then drive developments in financial and other economic markets. 1 See Bull (2004) for an overview of the statistical preparations for EMU and the further developments in the first five years thereafter. 10 Keuning In this regard, he stressed the importance of a single set of statistics that is used by all economic and financial policy-makers, market participants and the public at large. In an effective policy preparation process, public and private decision-makers do not need to debate about the numbers, whatever the outcomes are. Instead, they can then focus their deliberations on the best possible policy assessment based on these statistics and the forecasts derived from them. Of course, this also places a heavy responsibility on the shoulders of those responsible for the development, compilation and dissemination of these statistics. In this regard, Jean-Claude Trichet quoted a statement in a recent report by the ECOFIN Council and the Commission (2003): “For the smooth functioning of the euro zone as a monetary union working under a single monetary policy and decentralised but coordinated fiscal policies, macroeconomic statistics of the highest quality are required. The principles of impartiality, reliability,
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