Data have long been at the heart of central banking. The Bank recognises this, most recently defining ‘decision-making informed by the best available data, analysis and intelligence’ as a ‘timeless enabler’ of its mission and making ‘modernise the Bank’s ways of working’ a strategic priority for the years 2021 to 2024. But the availability of data and the capabilities to draw insights from them have developed rapidly over the past decade or so, as the more recent advances in the capabilities of large language models make clear. These changes, when coupled with expanding remits and global shocks, have created both opportunities and challenges for central banks.
In that context, in October 2022 the Court of Directors (the Bank’s board) commissioned its Independent Evaluation Office (IEO) to conduct an evaluation of the Bank’s use of data to support its policy objectives. The IEO adapted the Bank’s ‘timeless enabler’ to serve as its over-arching research question ‘Is decision-making to support the Bank’s policy objectives informed by the best available data, analysis and intelligence, and can it expect to be so in the future?’. That involved four detailed areas of investigation, covering broad questions of strategy and governance and three detailed areas of data management: acquisition and preparation; storage and access; and analysis and dissemination.
Findings and recommendations
Over the past decade, the Bank has taken significant steps to enhance data and analytics. It made data a prominent feature of the 2014 ‘One Bank’ strategy and in the strategic priorities for the next three years that it set out in 2021. It created the role of Chief Data Officer supported by an expanding team. It has rolled out new analytical and storage capabilities with associated training for staff. And, supported by its emerging centres of excellence, it has done pioneering analysis with new techniques and data sources.
Nonetheless, with best practice in data and analytics advancing rapidly, the Bank will need to step up the pace of change – and associated investment – if it is to take advantage of new opportunities. While progress has been made using a devolved operating model, data capabilities are inconsistent across the organisation and in some cases the current approach is sub-optimal. To progress further, management will need to systematically address a range of foundational technology and process issues and build the capabilities necessary to enable the Bank to take advantage of new data tools so it can be in the best position to deliver on the Bank's mission.
The IEO make 10 detailed recommendations, grouped into three broad themes. The first theme covers committing to a clear vision, supported by a comprehensive strategy and effective governance. The second involves breaking down institutional, cultural and technological barriers to keep in step with a changing world. And the third focuses on ensuring staff have the support and skills they need. Taken together, and accompanied by wider ongoing initiatives to strengthen key foundational enablers, these recommendations will help the Bank ensure that its data capabilities advance to match its ambition, especially as data and analytics best practice advances rapidly.