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Volume 31, Issue 1

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Wednesday, 20 December 2017 15:48

How Central Banks Are Using Big Data to Help Shape Policy

Central bankers around the world have set up or are creating departments to embrace big data in the quest for deeper insight into the economies they manage.

"Isaac Asimov once said, ‘I do not fear computers. I fear the lack of them,’" David Hardoon, chief data officer at the Monetary Authority of Singapore, said in a recent speech. "We are now starting to put in place the necessary tools, infrastructure and skillsets to harness the power of data science to unlock insights, sharpen surveillance of risks, enhance regulatory compliance and transform the way we do work."

Authorities like Hardoon are tapping publicly-available sources such as Google Trends and jobs websites to help "nowcast" their economies, and confidential data like credit registers that can help identify a stressed bank. Collection of micro data increased after the financial crisis, when policy makers realized they lacked the depth of information to make appropriate decisions.