Overview of MFS Statistics Skopje seminar 2-5 October 2013

1. Jean-Marc Israël Head of Division, Monetary and Financial Statistics ECB Overview of MFS StatisticsSkopje seminar2-5 October 2013

2. Contents 1 Production and dissemination of statistics – Challenges and international context 2 Overview of monetary and financial statistics 3 Case study: MFI statistics 4 Case study: MIR statistics 5 Selected results Overview of MFS Statistics

3. Each country has its statistics • GDP • population • inflation • money • external balance, … A monetary union is a single economic entity • common currency and monetary policy • free movement of persons, goods and services, capital flows • increasingly integrated (financial) markets A monetary union needs high quality statistics and indicators to • assess the economic developments in the whole area • base its forecasts • assess the transmission of monetary policy decisions on the economy • analyse and assess its financial stability • support the conduct of other policies (e.g. financial integration); and • other functions may be looming (e.g. micro-prudential supervision) Statistics production and dissemination Overview of MFS Statistics

4. Is it not possible to simply add up national data? Even if and when national data are • timely, • at the same frequency and • accurate enough… concepts and definitions may still diverge (following international standards which may also need to be interpreted) someclassifications differ, e.g. intra-transactions need to be classified as “domestic” of the monetary union and, thus, allocated to SNA/ESA sectors – once asymmetry-free institutions of the monetary union (e.g. the ECB) are residents of the union, but not of any country (even where they are located) Decentralised statistics processingChallenges for euro area statistics (1/2) Overview of MFS Statistics

5. Start from national statistics Harmonise concepts, definitions and methods to • increase comparability • enable consolidation, where appropriate • ensure the necessary coverage and level of disaggregation Cost-conscious approach • while statistics are a public good, and good policy basedon good data may be invaluable for business, they have a cost • simple, automated reporting is less costly • financial transactions and positions get (more) complex • security-by-security minimises the reporting burden Central banks maintain granular datasets, e.g. a common securities database, to identify, classify, value individual assets • securities (reference data, aggregated and individual) issues and holdings • granular lending data, in part based on credit registers, are also under study Decentralised statistics processingChallenges for euro area statistics (2/2) Overview of MFS Statistics

6. Based on international statistical standards • System of National Accounts 1993 (and stepwise 2008) • European System of Accounts 1995 and stepwise 2010, and • IMF Monetary and Financial Statistics Manual 2000 (being updated) The contribution of ECB’s DG-S to the IMF Manual was substantial Complemented by Compilation guides andText books common methodological definitions and concepts laid down for the euro area in Regulations (ECB/2001/13, as recast in ECB/2008/32; ECB/2001/18, as amended by ECB/2009/7; ECB/2007/8; ECB/2008/30) MFS (recast) Guideline (ECB/2007/9, amended by ECB/2008/31andECB/2009/23) and Manuals and/or Guidance notes All under a revision process (close to completion) Managing Eurosystem / ESCB statistics Harmonisation and best practices (1/3) Overview of MFS Statistics

7. Main ECB monetary and financial statistics manuals Manual on MFI Balance Sheet Statistics April 2012 http://www.ecb.europa.eu/pub/pdf/other/manualmfibalancesheetstatistics201204en.pdf Manual on MFI Interest Rate Statistics October 2003 http://www.ecb.europa.eu/pub/pdf/other/mfiintrestratestatisticsmanualen.pdf Manual on Investment Funds Statistics May 2009 http://www.ecb.europa.eu/pub/pdf/other/manualinvestmentfundstatistics200905en.pdf Guidance Notes on the Definitions of ‘Financial Vehicle Corporations’ and ‘Securitisation’ under Regulation ECB/2008/30February 2012 http://www.ecb.europa.eu/pub/pdf/other/guidancenotedefinitionsfvcsecuritisation2012en.pdf Monetary Financial Institutions and Markets Statistics Sector Manual March 2007 http://www.ecb.int/pub/pdf/other/mfimarketstatisticssectormanual200703en.pdf Managing Eurosystem / ESCB statistics Harmonisation and best practices (2/3) Overview of MFS Statistics

8. Plus, based on experience in collecting, compiling and disseminating statistics in EU Member States level-playing field: even-handed treatment sharing of information across nationalcompiling agencies and across Member States increasing use of common tools and methods a set of best practices for a medium-term convergence Managing Eurosystem / ESCB statistics Harmonisation and best practices (3/3) • to ensure: • fair competition • similar and light reporting burden • consistency and • accuracy Overview of MFS Statistics

9. Contents 1 Production and dissemination of statistics – Challenges and international context 2 Overview of monetary and financial statistics 3 Case study: MFI statistics 4 Case study: MIR statistics 5 Selected results Overview of MFS Statistics

10. Share of total assets by sub-sector (percentage) Euro area GDP in 2nd quarter of 2012: EUR 2.3 trillion The financial sector in the euro area - Overview Exluding other financial intermediaries other than IF and FVC. Data as of 2012Q2, ICPF data as of 2012Q1) Overview of MFS Statistics

11. The E(S)CB collects and compiles statistics for: The financial sector and its sub-sectors (e.g. credit institutions) A list (register) of financial institutions in the EU Financialinstruments (e.g. loans, securities) Outstanding amounts (e.g. balance sheet items) Transactionsand growth rates (e.g. annual growth of M3) “Prices” (interest rates, yields, exchange rates) Variousbreakdowns(e.g. counterparty sector, maturity, currency) E(S)CB statistics: Overview Overview of MFS Statistics

12. Monetary aggregates and counterparts: balance sheet statistics on banks and money market funds (e.g. M3, credit) Statistics on average interest rates (market interest rates, retail interest rates for deposits, loans for consumption, housing, firms) Statistics on assets and liabilities of investment funds (bond, equity, hedge funds etc.) Statistics on Financial Vehicle Corporations engaged in securitisation and banks’ securitisation June 2011 Statistics on Insurance Corporations and Pension Funds June 2011 Securities issues; yield curves; financial markets price, volume and structure; payments and securities settlement statistics Monetary and financial statistics Overview of MFS Statistics

13. Register of financial Institutions and Affiliates Database A register is key to identify the reporting population(s) (and stratify it/them) Key to identify and classify counterparts (by respondents) Key also to identify (financial) groups structures A register is essential for statistics, and its value added is even greater if it becomes multi-purposes, e.g. • ‘Close links’ for monetary policy operations • Identification of payment service institutions, and • Supporting the Single Supervisory Mechanism Monetary and financial statistics Overview of MFS Statistics

14. Contents 1 Production and dissemination of statistics – Challenges and international context 2 Overview of monetary and financial statistics 3 Case study: MFI statistics 4 Case study: MIR statistics 5 Selected results Overview of MFS Statistics

15. Case study ECB statistics: The ECB’s monetary policy and MFI b/s statistics Primary objective of price stability Governing Council takes monetary policy decisions based on a unified overall assessment of the risks to price stability Economic analysis Monetary analysis Analysis of economic dynamics and shocks Analysis of money and credit based on MFI statistics Cross-checking Macro-economic Projections Full set of information Overview of MFS Statistics

16. Other uses of MFI balance sheet statistics: Minimum reserves Economic analysis Financial stability Financial integration Statistical support to the ESRB Case study: MFI statistics Overview of MFS Statistics

17. Monetary Financial Institutions (MFIs) = financial institutions (= money-issuing sector of the euro area) = central banks + resident credit institutions as defined in EU law + other resident financial institutions whose business is - to receive deposits and/or close substitutes for deposits from entities other than MFIs and, - for their own account (at least in economic terms), to grant credits and/or make investments in securities Case study: Defining MFIs Overview of MFS Statistics

18. Case study: Defining the statistical balance sheet Overview of MFS Statistics

19. Case study: Collecting & compiling MFI b/s statistics • NCBs collect balance sheets from all MFIs resident in the country • NCBs transmit aggregated national balance sheet to ECB • ECB aggregates (sums) national balance sheets Euro area MFI aggregated balance sheet • The aggregated balance sheet is then consolidated = Netting the aggregated positions between MFIs in the euro area • Euro area MFI consolidated balance sheet  Euro area monetary aggregates andcounterparts. 5. Main euro area aggregates are seasonally adjusted by the ECB. Overview of MFS Statistics

20. Case study: Collecting & compiling MFI b/s statistics • However aggregated data may not suffice for in-depth analysis • Detailed breakdowns are requested by users following different analytical needs, e.g. monetary analysis, monetary policy transmission, collateral management, financial stability • Statisticians need to become more proactive and responsive to ever increasing and rapidly changing needs  Analytical Credit dataset based on granular loan data Overview of MFS Statistics

21. Contents 1 Production and dissemination of statistics – Challenges and international context 2 Overview of monetary and financial statistics 3 Case study: MFI statistics 4 Case study: MIR statistics 5 Selected results Overview of MFS Statistics

22. What is MIR? “MFI interest rates” statistical data are… interest rates and corresponding business volumes applied by MFIs (credit institutions) on deposits and loans to households (HHs) and non-financial corporations (NFCs) resident in the euro area denominated in euro collected by the ESCB from MFIs Case study: MIR statistics - Definition Overview of MFS Statistics

23. “MFI interest rates” are… in great demand cost of borrowing indicators are published since this summer (see Monthly Bulletin article in Aug. 2013 and PR in Sept. 2013) selected (national) business volumes for publication possible extension to better capture loans to SMEs Case study: MIR statistics - Definition Overview of MFS Statistics

24. Case study: MIR statistics - Breakdowns Overview of MFS Statistics

25. Contents 1 Production and dissemination of statistics – Challenges and international context 2 Overview of monetary and financial statistics 3 Case study: MFI statistics 4 Case study: MIR statistics 5 Selected results Overview of MFS Statistics

26. Evolution of M3 aggregate and loans to non-MFIs excluding general government (percentage change) Money and credit Overview of MFS Statistics

27. Sectoral contribution to annual growth rate of M3(percentage point contribution) M3 dynamics by sector Overview of MFS Statistics

28. Monetary policy transmission mechanism and financial stability Transmission mechanisms Overview of MFS Statistics

29. Nominal MFI interest rate on short-term loans to NFCs (% per annum) MFI interest rate on short-term loans Overview of MFS Statistics