ECB decides now is not the time for complexity

Strangely timed ECB announcement

The Governing Council of the European Central Bank (ECB) has decided to discontinue the preparations for the Collateral Central Bank Management (CCBM2) project in its current form. In the project detailing phase, a number of challenges in the field of harmonisation were identified and the Eurosystem has decided to address these issues first before proceeding further with a common technical platform. The existing Correspondent Central Banking Model (CCBM) for cross-border collateral management remains in place.

Tracking back through the link trail, it seems that CCBM2 is a project that has existed since 2007, and was being jointly led by the Central Banks of Belgium and the Netherlands. It was focused on unifying the platforms for handling of cross-border collateral posted with the national central banks. Now while the functions of CCBM2 embraces some hot-button issues such as collateral and Target2 balances, this all appears to be a sensible decision that an IT-heavy project was dragging on, getting more complicated than first envisaged, and probably diverting time from other more important tasks. But with the fevered speculation out there about this weekend, did this seem like a good day to bury bad news that could instead be the wrong day to be telling people that the Eurosystem collateral management system has a few holes in it that won’t be fixed for a while?


4 thoughts on “ECB decides now is not the time for complexity

  1. Pingback: » Battle for the Euro: June 15th Malleus Mundi

  2. Pingback: Links 6/16/12 « naked capitalism

  3. The precise problem all of the attempts to control the economy face is that the economy is merely one part of a very large, very complex, open, evolving system.

    Humanity has developed the technology to control mechanisms, and everyone has been brought up in a world where mechanisms are the standard world-view, and our ability to control them taken for granted.

    Less often understood is that humanity does not have the technology to control even simple systems, much less complex, open, evolving systems.

    The conceptual gulf between simple machines and even simple systems is huge. Unless the system is isolated and reproducible, we can’t do experiments with it, and therefore can’t derive cause-and-effect relationships. Without C&E, we can’t build a control system.

    Control systems are non-trivial even for simple machines. You need sensors to determine the current state of the machine, equations that allow predicting the machine’s next state from the current state, effectors to change the next state to a desired state, and a computational system that can use the sensor information and equations to determine how to set the effectors.

    We don’t have any of the elements we would need to control an economy, and indeed there is no evidence of merit that any country has done so. Quite the reverse, countries that try to manage their economies generally do poorly in direct proportion to their attempts.

    The reasons are obvious when stated in terms of systems : How do you make a better rain forest? Rules such as “Cut off all of the trees less than $7.50/hour” probably won’t improve your rainfoest.

  4. @lew, very well said from you. Thanks for giving other supporting details about it.
    Economy is really broad, and its really hard to handle when its about to fall.

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