Future Directions for Reserve Bank Financial Statistics

Article excerpt

1 Introduction

As New Zealand's central bank, the Reserve Bank of New Zealand has three main functions. These functions are: (1) the management of monetary policy to maintain overall price stability; (2) the maintenance of a sound and efficient financial system; and (3) the supply of legal tender to meet the currency needs of the public. In performing these functions, the Reserve Bank relies on a wide variety of information including, importantly, statistics on the trends and latest developments in various economic, financial, and demographic indicators.

Statistics find use at the Bank in several different applications, and it is convenient to consider these in terms of their timeliness and frequency of publication, and their immediacy to the policymaking process. First, data on transactions in financial markets (such as on exchange and interest rates) is continuously monitored by Bank staff to help form a real-time gauge of market conditions, to determine market participants' interpretation of economic news and monetary policy decisions, and as a forward-looking indicator to developments that may have bearing for the stability of New Zealand's financial sector.

Second, though new data on various sectors of the New Zealand economy (such as on housing or the retail sector) is available much less frequently, it is closely assessed by Bank staff for causes and effects. This new data helps inform views on the present state of the economy, and is consequently vital both in establishing 'starting points' for the production of the Bank's forecasts and in contributing to the rationale for a decision on monetary policy.

Finally, the Bank relies on access to long time series of data collected in a robust, consistent and accurate fashion to understand the structure of the New Zealand economy and its evolution over time, and to determine the role for monetary policy as a stabilising influence. These time series are also essential input to the development and estimation of economic models used at the Bank.

Having outlined the importance of timely and accurate data to the Bank, the remainder of this article focuses on the role of the Reserve Bank as a producer of statistics and surveys a selection of the statistics produced in-house. In producing these statistics, the Reserve Bank faces a number of challenges similar to those faced by statisticians around the world. These challenges are discussed in detail below. The article concludes by noting some of the current and planned statistical developments at the Reserve Bank that help ensure that financial statistics for New Zealand remain relevant and are of good quality for use by decision makers, both inside and outside the Bank.

2 The role of the Reserve Bank as a producer of statistics

The Reserve Bank Act 1989 empowers the Bank to collect and publish relevant data from financial institutions for monetary policy or financial stability purposes. With this mandate, the Bank is the key producer of statistics on New Zealand's financial sector that inform users and assist their decision-making processes. The Bank is well placed to collect and disseminate financial statistics, as it has a need for the data itself, has access to the information through its relationships with financial institutions, and has the expertise and credibility to interpret the statistics produced and to ensure quality.

Commensurate with its legal authority to collect statistics, and its objective of producing quality statistics, the Bank also strives to meet the responsibilities that accompany this role. The reporting burden placed on respondents is closely managed, and the data collected from individual financial institutions is protected by confidentiality provisions.

Statistics produced by the Bank are used externally by financial institutions, journalists, researchers, businesses, other central banks, and the general public. Each of these users has specific requirements that the Bank strives to understand and to meet. …