ENP Newswire -
Release date- 05082014 - Opinion piece by Mr
Today, central bank communication is right at the heart of monetary policy. It is actually a monetary policy tool in itself. Even for those with little interest in central banking, it is difficult to avoid the pronouncements of one or other of us in the newspaper. Those people may even end up reading the articles, if only because central bank communication can have a major impact on financial markets - and hence on their savings.
Central bank communication was not always so extensive. Think back to the days when the most important central bank in the world - the Federal Reserve (Fed) - would not even publish its interest rate decisions; rather, it would let the outside world derive them from the market reaction. Today, this sounds unbelievable. But it was only in 1994 that the Fed decided to make its interest rate decisions public in real time.
Designed between 1994 and 1998, the
In the first case, the main challenge for the ECB was to reconcile three attributes of central banks that do not immediately fit together: being very powerful and independent yet unelected. The best example of a country that had done this successfully was
This model has worked because, by sticking closely to its mandate, the Bundesbank has gained the trust of the people. It has cultivated this trust by actively communicating the rationale for its mandate and its plans to achieve it. This inspired the ECB's founding fathers to give the ECB an equally clear and narrow mandate oriented towards price stability. And we have established trust by clearly communicating that mandate and, of course, delivering it.
This task is more complex for the ECB, however, than it was for the Bundesbank in the past or the Fed today. Building trust among the 335 million citizens of the euro area is a major communication challenge. We are communicating in 18 countries using 15 different languages. In all these countries, citizens' expectations are different. For example, my predecessor as ECB President would tell me that if he took a walk in
The ECB also plays its part in building trust by opening up to the public. From the outset, we have taken a lead on transparency: for example, we were the first major central bank to offer monthly press conferences. But in these challenging times, when monetary policy has become more unconventional, we cannot stand still. That is why we have taken another step forward: from the start of next year we will publish summaries of the monetary policy meetings of the
We are currently working on finding the right format by conducting test runs. After all, we want these summaries to be understandable to interested members of the public. Only that way can they be fully effective.
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