Excerpts from remarks by Salvatore Rossi, senior deputy governor of the Bank of Italy and president of the Institute for the Supervision of Insurance (IVASS) at 29th (EC)2 conference, Big Data Econometrics with Applications
With the increasing digitalization of the economy, data has become central in all the social sciences, and economics is no exception. In fact, some have talked about data being the new oil of today’s world. Econometrics and statistics are therefore becoming increasingly dependent on the availability of huge and heterogeneous datasets.
We have been working with data analysis for many years, but it is now time to adapt our computational approaches to the new context. The number of possible applications of big data for central banks is huge, but some are critical:
- As more services go online, data ubiquity, and hence data security, are proving to be a major challenge for both private companies and central banks. Financial operators are able to gather massive amounts of data about customers and visitors, which are then analyzed to generate insights into buying behaviour. Some of this data is personal, and deserves to be protected against inappropriate use.
- Given all the well-known interconnections between operators in the market, the repercussions of technological innovation on the system’s stability are not clear. Public institutions like central banks and other financial supervisory authorities should examine the matter carefully.
The Bank of Italy has created an internal multidisciplinary team on big data, machine learning and artificial intelligence. The team includes economists, statisticians and computer scientists from different departments, working in close cooperation with the Information Technology Department. IVASS, the insurance supervisory authority working under the umbrella of the Bank of Italy, has opened a regulatory sandbox for some aspects of fintech and insurtech.