The European Central Bank is “drinking its own champagne”
The European Central Bank is “drinking its own champagne” by applying the principles and processes around data quality and data integrity that it obliges financial institutions to apply via the BCBS239 guidelines. The ECB’s Banking Supervision Data Division is part of DG Statistics at the central bank, which, these days, is also the banking supervisor for all systemically important banks headquartered in the Eurozone.
With thousands of banks providing data, (via their national regulators) to the ECB each quarter, the Bank subjects each filing to a host of “hard” and “soft” data quality rules. The “hard” rules include business rules expressed in portable XBRL formula, and many oblige financial institutions to pass them prior to their filings being accepted. The soft rules compare the filings against a host of “rules of thumb” as well as peer group benchmarks and comparison of individual data points against prior period filings and norms for filing cohorts.
They also incorporate measures that compare the timeliness, number of corrective filings and updates that are made by each financial institution. Dashboards of these data quality measures are used to help both the ECB and national regulators to decide the intensity of supervision that specific banks receive. Although many (if not most) of at least the soft measures are sensibly kept under lock and key, the ECB publishes aggregate data quality information with the rest of its banking statistics. The process itself is dynamic with data quality rules being reviewed and enhanced pretty much continuously.
The result is that the ECB has a formal and measurable way to understand the punctuality, accuracy, stability, completeness and plausibility of the information that it uses to make decisions. These are exactly the BCBS239 measures that it obliges banks to use in their own environments. These data governance rules help ensure that information that management relies on and that banks provide to their regulators is sourced correctly.
Aggregate data quality information is provided in Table 6 within the ECB banking statistics here.
This appears to be a terrific case study in data quality for any regulator, anywhere. We will link to Luis Suarez Tumi’s presentation as soon as possible.
