Fed’s Quarles Discusses Global Financial Stability and Data Gaps

When business scholars examine what transpired in the markets in 2020, in the midst of the COVID-19 pandemic, one of the things they’ll study is financial markets stability and the influence of data gaps.

Those data gaps were the topic of a recent webinar hosted by the Center for Financial Policy at the University of Maryland’s Robert H. Smith School of Business. Headlining the webinar was Randal Quarles, the vice chair for supervision at the Federal Reserve Board of Governors and chair of the Financial Stability Board, an international coordinating body that monitors and measures financial systemic risks and coordinates across countries to strengthen the global financial system.

The talk was hosted by Russell Wermers, Bank of America Professor of Finance at Maryland Smith and director of the CFP, was moderated by Patricia Mosser, director of MPA in Economic Policy Management School of International and Public Affairs Columbia University, and featured insights from Darrell Duffie, professor of management and finance at Stanford School of Business.

The conversation focused on the need to better monitor and measure financial stability risks, and the work that’s currently being done at the national and international level.

In the wake of the 2008 financial crisis, the finance ministers and central bank chiefs of the G20 economies asked the Financial Stability Board and the International Monetary Fund to take a look at the information gaps that exist across the global financial system and to make recommendations about how policymakers might improve the data collection around the world.

The FSB and the IMF issued a joint report in 2009 on the financial crisis and information gaps, including a series of recommendations. That report laid the groundwork for a plan to monitor the implementation of the recommendations.

“We called that ‘the data gap initiatives,’” Quarles said. The initiative has changed over the past five years, and now aims to implement the regular collection and dissemination of more reliable and more timely statistics, for use by policymakers.

“In particular, we are looking at monitoring risk in the financial sector, looking at data on interconnections, data on spillovers, which didn’t exist before, and then the methods for data sharing among relevant financial authorities and communication of the official statistics,” Quarles said.

In the CFP webinar, he described his work on the report, what he’s been doing since, and the impact of COVID-19 on the project.

Watch the webinar at “Financial Stability Analysis and Data: Minding the Gaps.”