1. Overview of MFS Statistics Skopje seminar 2-5 October 2013 Jean-Marc Israël Head of Division, Monetary and Financial Statistics ECB

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

3. Rubric www.ecb.europa.eu © 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) Overview of MFS Statistics 3 Statistics production and dissemination

4. Rubric www.ecb.europa.eu © 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) some classifications 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) Overview of MFS Statistics 4 Decentralised statistics processing Challenges for euro area statistics (1/2)

5. Rubric www.ecb.europa.eu © 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 based on 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 Overview of MFS Statistics 5 Decentralised statistics processing Challenges for euro area statistics (2/2)

6. Rubric www.ecb.europa.eu © 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 and Text 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/2008/31 and ECB/2009/23) and Manuals and/or Guidance notes All under a revision process (close to completion) Overview of MFS Statistics 6 Managing Eurosystem / ESCB statistics Harmonisation and best practices (1/3)

7. Rubric www.ecb.europa.eu © 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/2008/30 February 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 Overview of MFS Statistics 7 Managing Eurosystem / ESCB statistics Harmonisation and best practices (2/3)

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

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

10. Rubric www.ecb.europa.eu © Share of total assets by sub-sector (percentage) Overview of MFS Statistics 10 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) Euro area GDP in 2 nd quarter of 2012: EUR 2.3 trillion

11. Rubric www.ecb.europa.eu © 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 Financial instruments (e.g. loans, securities) Outstanding amounts (e.g. balance sheet items) Transactions and growth rates (e.g. annual growth of M3) “Prices” (interest rates, yields, exchange rates) Various breakdowns (e.g. counterparty sector, maturity, currency) Overview of MFS Statistics 11 E(S)CB statistics: Overview

12. Rubric www.ecb.europa.eu © 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 Overview of MFS Statistics 12 Monetary and financial statistics

13. Rubric www.ecb.europa.eu © 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 Overview of MFS Statistics 13 Monetary and financial statistics

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

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

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

17. Rubric www.ecb.europa.eu © 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 Overview of MFS Statistics 17 Case study: Defining MFIs

18. Rubric www.ecb.europa.eu ©Overview of MFS Statistics 18 Case study: Defining the statistical balance sheet

19. Rubric www.ecb.europa.eu ©Overview of MFS Statistics 19 Case study: Collecting & compiling MFI b/s statistics 1.NCBs collect balance sheets from all MFIs resident in the country 2.NCBs transmit aggregated national balance sheet to ECB 3.ECB aggregates (sums) national balance sheets  Euro area MFI aggregated balance sheet 4.The aggregated balance sheet is then consolidated = Netting the aggregated positions between MFIs in the euro area  Euro area MFI consolidated balance sheet  5. Main euro area aggregates are seasonally adjusted by the ECB. Euro area monetary aggregates and counterparts.

20. Rubric www.ecb.europa.eu ©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

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

22. Rubric www.ecb.europa.eu © 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 Overview of MFS Statistics 22 Case study: MIR statistics - Definition

23. Rubric www.ecb.europa.eu © “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 Overview of MFS Statistics 23 Case study: MIR statistics - Definition

24. Rubric www.ecb.europa.eu ©Overview of MFS Statistics 24 Case study: MIR statistics - Breakdowns Breakdown by Counterpart sectorHouseholds (HHs) Non-financial corporations (NFCs) Sole proprietors (doctors, architects, dentists…) Business coverage Outstanding amounts New business MaturityOriginal maturityPeriod of noticeInitial rate fixation Purpose of the loans to HHs For consumptionFor house purchaseFor other purposes Size of the loans to NFCs Up to EUR 0.25 mn Between EUR 0.25 mn and EUR 1 mn Over EUR 1 million CollateralisationWith collateralTotal Special instruments Revolving loans and overdrafts Credit card credit

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

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

27. Rubric www.ecb.europa.eu © Sectoral contribution to annual growth rate of M3 (percentage point contribution) Overview of MFS Statistics 27 M3 dynamics by sector

28. Rubric www.ecb.europa.eu © Monetary policy transmission mechanism and financial stability Overview of MFS Statistics 28 Transmission mechanisms

29. Rubric www.ecb.europa.eu © Nominal MFI interest rate on short-term loans to NFCs (% per annum) Overview of MFS Statistics 29 MFI interest rate on short-term loans