1. Impact of the Financial Crisis by Directorate General Statistics ECB Discussant remarks Ralph Kozlow, IMF Group of Experts on National Accounts Geneva, April 26 – 29, 2010 Agenda item 10

2. Overview of Contents of Paper Background – origins of the financial crisis Revisions to standards meeting needs revealed by the crisis Gaps in statistics identified by the financial crisis not addressed by revised standards

3. Background – Origins of the Financial Crisis Paper mainly blames the originate and distribute model of financial intermediation – Credit risk transferred from original lenders to less savvy investors downstream who bought credit derivatives for protection – Result was the development of complex and largely opaque interrelationships among financial institutions in which it became difficult to assess who was exposed to whom and to what risks.

4. Comments on Origins of the Crisis This part of the paper is rather brief (less than 2 pages long) Could mention the transmission mechanism for the crisis – how U.S. subprime mortgage losses affected lending elsewhere in the world – e.g., erosion of bank capital base resulted in curtailment of lending, even among banks or to creditworthy borrowers

5. Revisions to Standards Meeting Crisis Data Needs Highlights changes in the 2008 SNA and BPM6 that, once implemented, will meet data needs revealed by the crisis. Somewhat reassuringly, this is quite a long list – new instrument detail; increased sectorization in the financial sector; etc.

6. Comments on Revisions to Standards Section Despite revised standards, the paper makes it clear (in part 4) that more information is needed – Consider linking part 4 to part 3, to foreshadow the gaps that are mentioned in part 4 The paper notes that analysts like to keep macroeconomic time series stable over a long period of time, and that updates to the System are necessary to keep the system relevant – I agree – Also, there are ways to enhance data without changing the core statistical standards themselves (e.g., quarterly IIP in SDDS)

7. Gaps in Statistics Not Addressed by Revised Standards Picks up material from the Issing Committee report and the IMF/FSB G-20 report. It also includes information on various initiatives underway in the EU, including work in connection with the establishment of the European Systemic Risk Board (ESRB). The paper notes a number of IMF initiatives (CPIS, Balance Sheet Approach, creation of the Interagency Group, TFFS, Principal Global Indicators, Handbook on Securities Statistics, and the Working Group on Securities Databases)

8. Comments on Gaps in Statistics Not Addressed by Revised Standards All gaps in statistics identified by the financial crisis are assigned to a group to research. – Does not mean that every gap will eventually be closed International interconnectedness among large and complex financial institutions (LCFIs) represents a data gap, and a coordinated effort is needed to set up a suitable data base. – I fully agree that LCFIs are a new important dimension for statistics.

9. Conclusion I welcome the paper as a valuable review of developments underway in the area of financial statistics.