ECB Paper Discusses Integration of Microdata for Policy Needs
ECB published a paper that discusses the policy need for microdata and highlights some of the practical uses of the interlinked data. The paper sheds more light on how information in different granular databases can be combined and aggregated in a flexible manner according to different business needs. It describes in detail the process of linking through a common stable identifier, points out current limitations, and suggests a possible way forward. The paper also highlights that full integration of granular credit datasets may result in new reporting requirements to facilitate supervisory decision-making processes.
Since the financial crisis, central bank policymakers have expressed a need for more integrated microdata for monetary policy purposes and for macro-prudential and micro-prudential supervision, with a stronger focus on lending. In response to this policy need, the European System of Central Banks (ESCB) has increased the scope and quality of instrument-level data (for example, loan-by-loan) it collects. ESCB has further developed the Register of Institutions and Affiliates Data (RIAD), which is pivotal in ensuring the successful linking of the databases, because it ensures the unique identification of counterparties.
Once full integration of the granular credit datasets, such as AnaCredit, Centralized Securities Database (CSDB), and the Securities Holdings Statistics Database (SHSDB), is achieved through RIAD, policymakers will have a powerful tool at their disposal to compute exposures and indebtedness at the entity and group levels. The unique identification of both the borrower/issuer and the lender/holder will allow different risk analyses to be performed, such as the identification of excessive concentrations of investments in asset classes with common features. Many actors within the ESCB are waiting for such a tool to help them tackle challenges by exploiting the power of granular data. In this respect, new challenges could be identified and new reporting requirements may be set to collect relevant information for central banking and supervisory decision-making processes.
A possible future expansion of the reporting requirements in RIAD to also cover groups of “connected clients” would be welcome. Authorities streamlining data requests to reduce the reporting burden will have major benefits. Reporting master data to a unique, centralized platform will avoid duplication of work and reduce inconsistencies among different datasets. Granular databases require powerful IT tools to efficiently handle the huge amount of data received, stored, and analyzed. There is a demand for the easy and dynamic visualization of group structures and the overlaps and differences between the multiple group structures that RIAD can generate. It is also important that IT tools are used to further develop data quality checks to verify not only the consistency but also the plausibility of the data provided. Efforts are underway to develop such data quality checks within the ESCB. Finally, there is a need to increase the use of Legal Entity Identifiers (LEIs) to allow a high level of data standardization, thus helping users to link, analyze, and compare different data sources in a fast, automated way.
Related Link: Paper (PDF)
Keywords: Europe, EU, Banking, Statistics, Microdata, Granular Data, Macro-Prudential Policy, RIAD, AnaCredit, ESCB, SHS, Reporting, ECB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Scott Dietz
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
Previous Article
EIOPA Report Examines Asset and Liability Management of InsurersRelated Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.