ECB Economists Note Lack Of Communication With Public
The European Central Bank (ECB) economists presented a review on the new stage of the « central bank communication revolution ». Since the 1990s, regulators have actively spoken with the professional community. In recent years, discussions have centered on the next stage, which is direct communication from central banks to the largest audience feasible.
The ECB notes that central bank statements have little bearing on inflation expectations, that the public may occasionally misunderstand central bank language, and that the idea of « multi-layered » communication is not always helpful. Nevertheless, even though central bankers would prefer to avoid it, they will have to speak to the populace.
Recently, ECB economists released their analysis titled » Central Bank Communication with the General Public: Promise or False Hope? »
The paper focuses on one of the most hotly debated issues among central banks around the world: after 15 to 20 years of active communication between watchdogs and the professional community, they have recently mastered direct, unmediated communication with the public, including through social networks and television.
The ECB observes that both parties have trouble communicating due to language barriers. No country will become a nation of experts on monetary policy, and there is no reason for « ordinary people » to spend effort and time learning the macroeconomic language spoken by the Central Bank, economists ironically observe. « Communication with the public is like landing on an alien planet for many people from central banks: many are unable to disembark. » However, « simplification » is not always achievable, and explanations are required.
Finally, the popular concept of « multilayered » communication by the Central Bank (one « layer » – the experts, another – the media, the third – the public) does not work well yet. The reason is obvious: the « layers » are very good at mixing, what is addressed to one audience is constantly quoted (without proper understanding) by the other – the problem of the resulting « cacophony » is not satisfactorily solved, and this is another problem that puts into question the positive impact of direct communication of the Central Bank with the population on the credibility of the policy of the regulator.