Skopje Seminar 2-5 October 2013 Euro Area Statistics Jean-Marc Israël Head of Division, Monetary and Financial Statistics ECB Skopje Seminar 2-5 October 2013

ECB / Eurosystem / ESCB functions Define and implement monetary policy Conduct foreign exchange operations/hold and manage official foreign reserves Promote smooth operation of payment systems Contribute to smooth conduct of policies relating to banking supervision and stability of the financial system [Eurosystem: ECB and national central banks of 17 (18 from 1.1.14) countries in the euro area] [European System of Central Banks (ESCB): ECB and national central banks of 28 EU Member States]

Economic and Monetary Union (EMU) EU Member States which have adopted the euro FI SE EE LV EU Member States with a special status LT DK IE UK NL PL DE BE EU Member States with a derogation LU CZ SK FR AT HU RO SI HR IT BG PT ES GR CY MT

Key characteristics of the euro area € -17 EU -27* Population (millions) 333 504 314 128 GDP (PPP, € trillions) 9.5 13.4 12.3 3.5 GDP per capita (PPP, € thousands) 28.5 26.6 39.3 27.6 Share of world GDP (PPP, %) 13.7 19.4 18.9 5.6 Exports (goods and services, % of GDP) 26.8 18.3 14.1 15.4 Gross fixed capital formation (% of GDP) 18.4 17.9 15.8 21.2 Gross saving (% of GDP) 20.2 18.9 12.9 24.5 ** * The figures for Croatia are not yet available. ** refers to 2011 Sources: for euro area and EU: ECB, Eurostat, national data, IMF and ECB calculations; for the United States and Japan: national sources, IMF.

Governance of European statistics (I) The ESCB European System of Central Banks European Statistical System ECB Eurostat + + National Central Banks National Statistical Institutes Prime responsibility Prime responsibility Monetary and financial statistics International reserves Effective exchange rates Quarterly financial accounts General economic statistics (e.g. GDP, HICP, other price statistics, labour market, other short-term statistics, foreign trade) Other statistics (e.g. agriculture) Balance of payments International investment position Non-financial sector accounts Shared responsibility

Governance of European statistics (2) The ESCB and the European Statistical System (Eurostat and National Statistical Institutes) develop, produce and disseminate European statistics under separate legal frameworks, reflecting their respective governance structures Memorandum of Understanding between ESS and the ESCB (updated, April 2013) enhanced cooperation: European Statistical Forum – strategic cooperation work jointly in Committee for Monetary, Financial and Balance of Payments statistics (CMFB) - operational cooperation

Financial Vehicle Corporations Article 338 of TFEU Legal infrastructure Legal framework for European statistics (1/2) Legal framework for European statistics (1/2) 2533/98) Financial Vehicle Corporations 10 10

ECB legal instruments concerning statistics ECB-UNRESTRICTED Regulation – directly imposes obligations on reporting agents in euro area Guideline – imposes obligations on Eurosystem (including ECB) Recommendation – informs statistical authorities other than central banks in euro area of ECB requirements; not legally binding Decision – imposes obligations on addressees; can also be without addressees Notice – to inform/explain Opinion – expression of ECB view, usually in response to a consultation under Treaty/Statute Also Memorandum of Understanding – its nature and status

Brief overview of ECB statistics MFI (banking) balance sheets; monetary aggregates and counterparts MFI interest rates Securities issues Other (non-monetary) financial intermediaries Financial markets Payment systems Balance of payments International investment position Other external statistics Government finance Euro area integrated institutional sector accounts NB: ECB uses also many statistics from sources outside ESCB/Eurosystem (prices/costs, national accounts, labour market statistics, etc.), and that responsibility for some of the above is shared with Eurostat [MFI = monetary financial institution]

Who does what in ESCB/Eurosystem Article 5 ( Statute): “… the ECB, assisted by the national central banks, shall collect the necessary statistical information […] The national central banks shall carry out, to the extent possible, the task[s]…” NCBs: - Collection of data from reporting agents, other national statistical authorities, other national sources All contact with reporting agents/representative bodies Compilation and publication of national aggregates/contributions to euro area aggregates ECB: - Collection of data from other Community/international sources (e.g. Eurostat, BIS) Compilation and publication of euro area aggregates Shared: - Conceptual/development work, development of legal/technical infrastructure (ECB in lead) Participation in Community/international statistical committees NCBs perform many of their tasks in accordance with ECB Guidelines. NCBs have responsibility for meeting the ECB’s requirements. Though there are instances of specialisation, all Eurosystem NCBs contribute to statistical work in broadly the same way. [BIS = Bank for International Settlements ( Basel)]

Complying with international statistical standards System of National Accounts (1993) and other Manuals IMF Balance of Payments Manual, 5th edition (1993) IMF Monetary and Financial Statistics Manual (MFSM 2000) IMF Government Finance Statistics Manual (GFSM 2001) European System of Accounts (1995) … complemented by legal definitions, compilation guides and manuals, at international and European level ECB Statistics is currently implementing the new standards SNA 2008; ESA 2010; BPM 6

Compiling euro area aggregates Usual approach – build from national contributions. Importance of harmonisation of the national contributions. Some euro area aggregates are a simple sum of (harmonised) national data, but some not. National money stock commonly includes deposits held by residents with banks located in the country concerned. Euro area money stock includes deposits held by residents of all euro area countries with banks (MFIs) located anywhere in the euro area it exceeds the sum of national money stocks by the amount of cross-border depositing within the euro area. National balance of payments statistics measure all cross-border transactions of residents of the country concerned the b.o.p. of the euro area excludes cross-border transactions within the euro area gross flows in the euro area b.o.p. fall short of the sum of national b.o.p. flows by the amount of these cross-border flows within the area

National and euro area monetary aggregates In German M3 In neither German nor Austrian M3 In Austrian M3 Deposits held by Deposits held by Deposits held by Deposits held by Germans with MFIs Germans with MFIs Austrians with MFIs Austrians with MFIs in Germany in Austria in Germany in Austria All the above are components of euro area monetary aggregates I----------------------------------------------------------------------------------------------------------------------------I

Reference reporting population for ECB statistics Central banks, other MFIs Other (non-monetary) financial intermediaries Post office giro institutions Entities holding cross-border positions or carrying out cross-border transactions Issuers of securities or e-money The reference reporting population is confined to entities resident in the euro area (but the ECB may collect from them consolidated data which includes information relating to their branches outside the euro area). This is all set out in Community legislation Regulation No 2533/98 - notable amendment here in No 951/2009 is extension of reference reporting population to include insurance corporations and pension funds.

Monetary and financial statistics Monetary aggregates and counterparts, minimum reserves Interest rates, securities issues Investment funds Financial Vehicle corporations Insurance corporations and pension funds Financial soundness indicators, financial integration indicators Financial stability statistics, of which Consolidated Banking Data Financial market statistics - yield curve, PDFs -

ECB statistical support for the ESRB Council Regulation 1096/2010: The ECB has to provide statistical support to the European Systemic Risk Board (ESRB) Main sources of data for the ESRB are: Data exchange with the European Supervisory Authorities (EBA, ESMA, EIOPA) Statistical support from the ECB/ESCB Commercial data providers and other datasets Ad-hoc surveys ECB, STC and its working groups involved actively in several workstreams Examples: identify main datasets for the ESRB; setting up the White Book, Risk Dashboard, Analysis of National Banking Systems; help shaping the data flows between the ESCB and the European System of Financial Supervisors

Financial stability: ESRB Risk Dashboard Composite indicator of systemic stress (CISS) Bank liabilities structure (annual growth rates for EA) Average systemic risk contribution of individual institution to overall risk using CoVar (EU banking syst.) Domestic credit-to-GDP ratio Actual and forecasted GDP growth Households debt to gross disposable income Real estate comm. property, market size over GDP Global risk aversion indicator Price/earning ratio EU large banks: Leverage ratios 17

External statistics Euro area balance of payments and international investment position - including international reserves Monthly balance of payments Quarterly breakdown by main partners International investment position (balance sheet) and link to balance of payments Nominal and real effective exchange rates of the euro The geographic breakdown of the euro area current and capital account, international investment position and trade in goods is published in the ECB Monthly Bulletin

Government Finance statistics Protocol on the EDP: 3% and 60% of GDP as reference values for government deficit and debt reserves Complete set of government accounts (revenue, expenditure, debt and deficit-debt adjustment) providing an integrated overview of the government balance and debt in annual frequency Fiscal discipline is essential for the stability of the euro keeping price stability: direct (e.g. VAT) and indirect effects (wages) containing inflation expectations: rising government debt may lead to pressure on the ECB to tolerate higher inflation to erode the real value of debt keeping financial markets stable: interest rate on government debt in one country is affected by the evolution of other countries deficits and debts quarterly breakdown by main partners

Euro area accounts Complete description of euro area economic and financial developments: whole economy and by institutional sector (financial and non-financial corporations, households and government, rest of the world) Integrates monetary, financial and economic statistics Consistent statistical basis for quarterly economic analysis, with integrated non-financial accounts and financial accounts Enables analysis of interrelations between key macro-economic policy indicators (e.g. household saving rate, indebtedness and changes in wealth; entrepreneurial income of non-financial corporations; government debt)

EAA by Institutional sectors

For whom to whom: long term loans

General economic statistics Other European statistics used by the ECB (Eurostat primary responsibility): Harmonised Index of Consumer Prices (HICP) GDP Business indicators: industrial production, retail trade, etc. Employment, unemployment, labour costs, etc.

ECB Governing and General Councils ESCB Statistics Committee (STC) Decision-making bodies for ECB statistics ESCB Statistics Committee (STC) and its Working Groups are at the core of the production of ECB statistics ECB Governing and General Councils ECB Executive Board ESCB Statistics Committee (STC) WG on Monetary and Financial Statistics WG on Euro Area Accounts WG on External Statistics WG on General Economic Statistics WG on Government Finance Statistics WG on Statistical Information Management WG on Securities Statistics