By Ken Rossiter and Seth Oliphant, SunGard’s global trading business
Central banks are one of the driving forces around a nation’s economy. They are not only responsible for policy around macroeconomic variables - such as interest rate policy, exchange rate maintenance - but now are tasked with the microeconomic oversight of regional banks as well. This is creating a need for central banks to not only increase their focus on collecting the right data, but also to turn that data into actionable insights using business intelligence (BI).
Data Collection
In order to perform the above tasks, central banks are now aggregating massive amounts of macroeconomic and microeconomic data. Collecting, calibrating and aligning these diverse sets of data from disparate sources are of critical importance for these organizations and quite often a significant challenge. Macroeconomic and microeconomic data sources are very different in terms of orientation and frequency, and aligning and analyzing these very different types of data is critical.
Every data point collected serves one purpose or another. Data on imports and exports give a fair view of the goods and currency exchange that happens in a country and the short-term impact on current accounts. Loan details by segment provide the credit flow that occurs in different sectors of the economy. Financial statement details enable central banks to assess the stability of a regional bank around items such as capital adequacy.
Deriving Intelligence
The amount of BI that must now be derived is immense. BI is now getting a great deal of attention from central banks due to the necessary coverage of both the macro and the micro. BI is about giving life to data and allowing it to reveal inherent problems that would not be directly visible in the core numbers themselves.
From trend graphs to cartographic representations, central banks need a variety of BI-driven visual tools to understand where imbalances lie. Some examples of BI used by central banks include looking at correlations between interest rates and non-performing loans, analysis of the relationship between foreign exchange (FX) rates and their regional banks’ foreign investments, and understanding the interconnectivity between inflation and loans by regional banks based on industry segment.
Juxtaposing macro and microeconomic variables in a clear and concise BI reporting infrastructure ensures central banks are looking at their country’s economies from a holistic perspective.
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About the authors:
Ken Rossiter is a senior product manager for SunGard's MarketMap analytic platform and analytic consulting services. He has 22 years of experience in the financial services industry and analytic data management systems in particular.
Seth Oliphant is a senior analyst with SunGard and focuses on technology solutions for central banks in the Americas. With nearly 20 years of experience in financial technology, he’s worked on SunGard’s post-trade derivatives solutions and Dodd-Frank compliance solutions, and solutions for Latin American financial institutions.