The Long Journey of Central Bank Communication
104 pp., 5 x 8 in, 3 figures
- Published: September 24, 2019
- Published: September 6, 2019
A leading economist and former central banker discusses the evolution of central bank communication from secretiveness to transparency and accountability.
Central bank communication has evolved from secretiveness to transparency and accountability—from a reluctance to give out any information at all to the belief in communication as a panacea for effective policy. In this book, Otmar Issing, himself a former central banker, discusses the journey toward transparency in central bank communication. Issing traces the development of transparency, examining the Bank of England as an example of extreme reticence and European Central Bank's President Mario Draghi as a practitioner of effective communication. He argues that the ultimate goal of central bank communication is to make monetary policy more effective, and describes the practice and theory of communication as an evolutionary process. For a long time, the Federal Reserve never made its monetary policy decisions public; the European Central Bank, on the other hand, had to adopt a modern communication strategy from the outset.
Issing discusses the importance of guiding expectations in central bank communication, and points to financial markets as the most important recipients of this communication. He discusses the obligations of accountability and transparency, although he notes that total transparency is a “mirage.” Issing argues that the central message to the public must always be that the stability of a nation's currency is the bank's priority.
Otmar Issing is a giant of central banking, having guided the European Central Bank as its Chief Economist in its early years. This book is a masterful exposition on central bank communication, drawing on both his experience and the latest academic studies. His sage reflections on what central banks should communicate, and how they should go about it, will be very useful for practitioners and academics alike.
Raghuram Rajan, Katherine Dusak Miller Distinguished Service Professor of Finance, University of Chicago Booth School of Business
Central banks today focus on communication more than ever before. Is this sensible? Otmar Issing has produced a superb appraisal of recent developments that is remarkably comprehensive, accessible to all, and a model of communication itself.
Mervyn King, former Governor of the Bank of England