www.worldcommercereview.com regain thepublic’s trust by changing theway they Andy Haldaneexplores how central bankscould conversation alittle A littlemore less action communicate www.worldcommercereview.com B degree ofoperational policy independence over monetary and influence,Some have at leastinsomequarters. tweaking, suggested even perhaps reversing, central banks’ At thesametime, central bankshave faced mounting andsomemistrust, responsibilities oftheiractions, criticism, among themostpressing issuesfacingcentral bankstoday. rendering ineffectiveSuperwoman), theirpolicies andunaccountable is Buildingtrustandlegitimacy theiractions. andfinancial, including central (andtheodd tary banks. Supermen Kryptonite for centralAnd incredulity is banking These views may bepolarised, even perhaps caricatured. Buttheymatter. Trust isthelifeblood ofallthings mone belief andanepochofincredulity. isby Ahappy nomeansassured. endingto thisstory banks itisthebestoftimesandworst oftimes;itisanagewisdomandfoolishness; itisanepochof Dickensnovel. ofaCharles hasallthehallmarks This onwhoyou story Depending follow on Twitter, for central colourfully, as ‘masters oftheuniverse’ and onlygameintown’‘the been larger orasfar-reaching astoday. isnocoincidence that It theyhave recently beendescribed, variouslyand of central banksmay never have beengreater thantoday. taken by central And theactions banksmay never have isnotdifficult tosee It why. The profile of central banks may never have beenhigherthan today. The responsibilities moving, central banks’ degree ofdiscretion policy over monetary ers” shamans. We place control oftheworld’s largest economy inthehandsofafewelderlymen,central bank- notto science, limited “So isourknowledge thatwe resort, Mandelbrotack in2004,Benoit observed: butto old. Butthegeneral sentiment isnotonewhichwould beentirely outofplace today. 1 . You could quibblewiththedetailhere –afew central bankersthesedays are women andafew are not 3 . Others have. Others suggested constraining, even perhaps re 4 . 2 . - - www.worldcommercereview.com ety revolution incentral bankcommunications over recent years, withmuchwideranddeeperengagement withsoci- I want to explore oneavenue for how doingso–rethinking andwithwhomcentral banksengage. There hasbeena Second, theway trustisbuilthasbeenfundamentally reconfigured. Where once trust was anonymised, institution- ened. First, hasdealtatrust-busting theglobalfinancialcrisis blow to many institutions, including central banks. But two recent developments meanthat central banks’ engagement strategies may needto bewidenedanddeep andindependence bad. during bank legitimacy 5 . That hasbeenessential inbuildingcentral goodtimesandprotecting banktrustandcredibility central during listening as often as talking as often as listening previously used, conversing as much as convincing, convincing, as much as conversing used, previously have not reached, using media they have not not have they media using reached, not have ensure they reach the parts of society they previously previously they society of parts the reach they ensure central banks. Their latest metamorphosis needs to to needs metamorphosis latest Their banks. central As trust and technology has changed, so too must must too so changed, has technology and trust As - www.worldcommercereview.com Let me start by looking backwards. by looking Let mestart The 20 The risingtideofcentral banking derstand theviews andbehaviours ofwidersociety. For central banks, thisisabrave newworld. andusingnewtechnologies –nudgingtening astalking; andpolling, asoften namingandgaming–to better un- localised, personalisedmessaging; currently findingnew ways ofsociety outof reach, lis- to engagewith cohorts Those new frontiers includecommunicating insimpler, narrative languagethat engagesawideraudience using time asany to begin thesenewfrontiers exploring ofcentral bankengagement. central banks’ shoulders, andthechanging socialandtechnological landscapefacingthem,itisprobably asgooda is notoneIcould remotely dojustice to tonight. Nonetheless, weight given thesedays thepolicy beingplaced on norms andtechnologicalnorms possibilities As theyhave through theirhistory, central bankswillneed to adapttheircustoms to and practices thesenewsocial ously. diffuse thanever previously, usingasetoftrust-building technologies, less well-understood thanthoseusedprevi- the challengefor central banksisto rebuild trustamongawidersetofsocietalstakeholders, more distrustfuland alised andcentralised, today itisincreasingly personalised, socialisedanddistributed. Facing thesenewconstraints, ing foreign exchange central peg;distributing to financialinstitutions, to bankliquidity acurrency preserve innor days, theseearly In therole ofcentral asanoperational ofgovernment: to bankswas arm often act buyingandsell- Bank ofEngland’s case, itwas allthree. 1). Their responsibilities were heavily circumscribed typically by custom andpractice, by law orby thestate. the In cameofage. there weretral At banking itsstart, fewer than20recognisably ‘central banks’ operating globally(Chart 6 . isnotoneremotelyThis isabigagenda.It uniqueto central banks. And it th century may historians astheonewhencen yet- century beseenby monetary - www.worldcommercereview.com banks globally atively measure, modest. Ononeoften-used asrecently as1981there were stillfewer than50independent central oversharply thepastfew decades. Until the 1980s, thenumberofrecognisably ‘independent’ central bankswas rel- and secularly hasrisen policy central onmostmetrics Nevertheless, bankindependence inthesettingofmonetary As the20 public to serve astheultimatepublic to mediumofexchange serve asbanker to thegovernment andto times;serving mal andcrisis commercial to the banks;andissuingbanknotes monetary policy hassky-rocketed, from rising policy around ahalfinthe1980sto around agener monetary 85%today 2).In (Chart these various dimensionsofcentral bankindependence decision-makersare appointedicy andheldto account. measuring Indeed, there isnow asmallcottage industry andhow pol- policy shades ofindependence, andinstruments dependingonwhosetstheobjectives ofmonetary Even theword ‘independence’ needscareful interpretation. As international hasshown, practice there are various policy. Latterly,tary thishasgoneby thenamecentral bankoperational ‘independence’. not astraight linerise, intheirstock ofresponsibilities. Prominent amongthese was responsibility for setting mone In otherwords,In thecourse during ofthe20 the nation state bank rose from around one-quarter at the start ofthe20 at thestart bank rose from around one-quarter number ofindependent nation states. Butthat isnotthewholestory. ofnationThe states fraction withacentral banks asthere are countries intheworld. ofthisascent Some wasconsequence simplythearithmetic ofarising threefoldaround its end, 60.By to afurther theyhadrisen notfaroff200. Today, there are roughly asmany central th century unfolded, century central banknumbersswelled. itsmid-point, more By theyhadrisen thantwofold, to 10 8 . In the period since, theperiod ofcentral. In thefraction bankswithoperational independence inthesetting of . Accompanying inthenumberofcentral thisrise banksthrough the20 th century central century bankscameto beseenasanessential buildingblockof 7 . 9 th . century to closeto oneby century itsend. th century was arise, albeit century - - www.worldcommercereview.com banking aboutthe Brunnerwas stillspeaking took practices intransparency time. 1981,Karl This shift In ‘mystique’ ofcentral delegated powers cameincreased societalresponsibilities to explain how thosepowers were beingdischarged. wasThis anatural shift accompaniment to increased central bankresponsibilities andautonomy. With increased hasbeenincreased monetary, abouttheir actions, opennessandtransparency andmicro-prudential.history macro- effect, theBank’s first “keeppress officer: theBankoutofpress andthepress outoftheBank” tively mute. The prevailing ethoswas well-captured by provided thejobdescription to theofficialwhobecame, in agenda. For itsfirstthree centuries, theBankappears to have keptitspublicutterancesIt was effec to aminimum. banks’ psyche. And for muchthegreater ofitshistory, theBankofEnglandwas part at theforefront ofthat opacity UK, micro-prudential supervision hasreturned to theBank supervision micro-prudential UK, largest banks. The Federal Reserve’s responsibilities have beenexpanded andenhanced. And supervisory inthe crisis, however, that trend hasreversed 3). (Chart theeuroThe area’s ECBhasassumedresponsibility for supervising was increasingly therun-upto thefinancialcrisis, locatedIn policy micro-prudential outside central banks. Since the is alsospread across agencies, includinganumberofcentral banks. doing so. theUS,responsibility isshared In across agencies, includingtheFed. theEuropean In Union,responsibility setting new macro-prudential toolssetting newmacro-prudential This policy. tideofresponsibilities rising isnotconfined Aroundto monetary 80% of central bankshave some role in a statement ofbestinstitutional practice. ation, operational independence to hasbecome hasgonefrom have-to-have. aninternational nice-to-have It norm, nor (Paul King) Volcker) to another(Mervyn to itsword. 13 . In the early 1990s, theearly . In ‘mystique’ was advice stilltheone-word offered by oneprominent central bankgover 11 . The BankofEnglandisamongtheover 50%ofcentral banksfullyincharge of 14 . For mostoftheirhistory, hasbeendeeplyingrained opacity incentral 12 . The most recent chapter incentral banks’ evolutionary 15 . The Bankwas good - - www.worldcommercereview.com Source: Central Directory Banking ofcentral 1.Number Chart banks www.worldcommercereview.com on price stability. ‘All also includesvariables aspects’ formulation; related andlimitationsonlendingto thegovernment. to oftheCEO/Governor; policy theappointment Notes: Central bankswithvalues objectives’ greaterpolicy measures orequal whetherthe to 0.4ontheindexarecentral definedasindependent. ‘Monetary bank’s objective isfocused (2016)usingindexofCukierman etal(1992). Source: Garriga 2.PercentageChart ofindependent central banks www.worldcommercereview.com Sources: Bank Regulation and Supervision Surveys: World Surveys: Sources: Bank(2003,2007,2011). BankRegulationandSupervision responsibility for bank supervision 3.PercentageChart ofcentral bankswith Source: BankofEngland. speeches 4.Governors’Chart andotherpolicymakers’ www.worldcommercereview.com David Stockton, theBankbeganpublishingforecasts for awidersetofvariables In 2013, the Bank began issuing so-called 2013,theBank beganissuingso-called In ‘forward guidance’ actions onitspolicy speeches were publishedminutes ofMPCmeetings. from aroundes increased 13peryear further intheninetiesto around 34inthenoughties. Accompanying these Policy Committee in1997,thenumberofpublishedspeech- (MPC) Monetary With ofthenine-person thearrival gainedasister publication, thesix-monthly Financial 1996,theInflationReport Review. In Stability economic outlook. , settingoutitsviews onthe InflationReport meetings. 1993,theBankbeganpublishingaquarterly In policy etary 1992,aformal targetIn for inflationtogether witha was announcedregular schedule ofmonthly intheUK, mon- roughly adoublinginthenumberofspeecheseachsubsequent decade. was munication innovations. Bulletin.There December 1960saw thefirsteditionofBankEnglandQuarterly andhisdeputiesincreased,ernor by the1960saveraging around five per year. They were matched by other com- Beginning inthe1960s, incentral there was bankcommunication asea-change practices. Speeches by theGov medium. face. Nonetheless, for Governor, even themostmalleable-faced the ‘eyebrows’ communications were animperfect of theBank’s meansofcommunicating. The eyebrows were, inaway, aprimitive form –sad ofemoji:sterling crisis the spokenword. itwas at So theBankofEngland. the1920s, In theGovernor’s ‘eyebrows’ famouslybecameone bankersandmerchants,City several glassesofwineinto theevening. languagecansometimessubstitute Body for was itnotideallysuited to enhancingwiderpublicunderstanding, beingdelivered to anaudience ofaround 300 4). precisely onespeech ayear (Chart Houselecture -theannualMansion This tended notto incontent. berich Nor 1920to theperiod 1945,theBank’sDuring communications strategy was farfrom expansive. The Governor gave view by Kevin Warsh, theBank agreed meetings(Table to 1) publishfulltranscripts ofMPCpolicy 17 16 . And from 2015,following are . In 2014,following. In areview by 18 . - - Table 1. Timeline of selected communication and transparency innovations for major central banks

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Operational Inflation Publish independence. report minutes of Publish Bank of launched. Governor- Minutes More timely analysis of England Chancellor published. minutes. forecast Quarterly policy accuracy. forecasts. meetings. Press conferences. Regular monetary policy meetings. State- Publish Announce Qualitative contingent more Publish Bank of Publish policy. forward forward timely policy Japan forecasts. guidance. guidance. policy model. Publish rationale. minutes.

Publish transcripts. Established with formal Publish European inflation (staff) Publish Publish Central objective semi- policy quarterly Bank and opera- annual model. forecasts. tional inde- forecasts. pendence Publish Announce Immediately minutes. rate Quantitative Rationale US Publish announce Qualitative More changes. announcement even when Federal future individual forward timely Publish and policy no policy Reserve transcripts. voting guidance. minutes. past Explain rationale. change. record transcripts. rationale. Table 1 continued

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Publish more Publish detail about transcripts. State- forecast. Bank of contingent Publish England forward Independent minutes guidance. evaluation on day of office. decision. Policy rationale even Publish Formal Publish more when policy Publish individual Bank of inflation detailed unchanged. quarterly forecasts Japan objective. backgrounds forecasts. and risk for forecasts. More timely assessments. minutes. European Qualitative Publish more Publish Central forward detail about minutes. Bank guidance. forecast. Formal inflation objective. Press Individual conferences. US Publish interest Publish Federal quarterly rate fan Time-based Reserve forecasts. projections. charts. forward guidance. State- contingent forward guidance.

Sources: Danker and Luecke (2005), Eijffinger and Geraats (2006), Plosser (2011), Warsh (2014), Cordemans (2015), Blinder et al (2017), Praet (2017), Bank of Japan. www.worldcommercereview.com a steady ratchet-up inopennessacross arange ofcentral banksover 5).And ifwe time(Chart lookat mentions of Bringing thistogether, weighted-average itispossibleto construct aggregate indices. transparency These show ters, withafocus on issues relevant to low- residents. andmoderate-income resentatives. meetswiththeFed It Board ayear twice to provide information andrecommendations mat onpolicy Federal Board formed Council, a new Community Reserve Advisory which contains a diverse group of 15 citizen rep The Federal hasalsosought to from learn listening Reserve to theviews ofthosesamecommunities. 2015,the In initiatives oftheCommunity Development team at Francisco theSan Fed are excellent examples ofthiswork local levels. That withcommunities whoseresidents includesworking are low- andmoderate-income. The various has along-standingandextensive commitment to promote development community at thenational, regional and The major central banks’ engagement strategies have beenequallyasimpressive. For example, theFederal Reserve for interest rates, whichtheFed hasdonesince 2012(Table 1). meetings, mostrecentlyin Japan1999;publishingminutes ofpolicy introduced by theECBin2015;andforecasts ately itstarget interest rate eachmeeting;theannouncement after ofdifferent of guidance,forms forward starting milestones amongtheworld’s majorcentral bankshave included:in1994,theFed’s decisionto announce immedi- These step have changesintransparency beenbroadly mirrored across arange ofothercentral banks. Notable ofthepubliconawiderangecross-section ofissues. competition, involving over 250schools. And ithosted aFuture Forum, at whichitengagedopenlywithabroad Bankofficialsvisitedgional 5,000 nearly agencies across companiesandcharities. theUK. TheBank ranaschools peared before Parliament on22separate occasions. Bankofficialsmade Senior around 60visits totheBank’s re These publications donotcapture theentirety oftheBank’s engagement strategy. 2016alone, In theBankap 19 - . - - - Chart 5. Central bank transparency indices

Sources: Dincer and Eichengreen (2015) for data up to 2014, Bank of England calculations based on the index of Eijffinger and Geraats (2006) for latest datapoint. Chart 6A. Mentions of central banks in The Times newspaper

Source: Factiva. Notes: Charts show number of mentions per decade. Chart 6B. Mentions of central banks in The Financial Times newspaper

Source: Factiva. Notes: Charts show number of mentions per decade. Chart 7. Publications containing ‘central bank communication’ as a percentage of publications containing ‘central bank’

Source: Google Books Corpus, search of http://scholar.google.com on 23/03/2017. Notes: Based on the methodology of Hansen and McMahon (2016). www.worldcommercereview.com to makedecisionsaboutspending, saving, andthelike. working (now andinthefuture). This reduces felt the degree by households andfirms, ofuncertainty better enablingthem agents’ information onthelikely course ofthe economy (now andinthefuture) and/oronthelikelycourse ofpolicy First, improved central bankcommunications canhelpstabilisetheeconomy. They dosoby improving outside rected. theory, In transparent communications confer two high-level benefits their openness, theadvantages thismay have conferred andwhere might future bestbedi- efforts transparency This literature point for provides assessingtheprogress ausefulstarting madesofarby central banks inboosting guage publications over thepast70years 7plotsthepercentage ofmentionsChart ofthewords ‘central bank’ followed by ‘communication’ inEnglish-lan- erature to understand, explain seeking andassess theimplications ofthisshift. This literature hasbeengrowing fast. lockstep withthisevolution-cum-revolutionIn incentral hasemerged practices banktransparency anacademiclit The of benefits central bank communication has takenplace, incentral bankterms, at warpspeed. not beover-egging this puddingto callthisagenuinerevolution incentral banktransparency. And thisrevolution leases -intotal, over 600publications. That is around 9,000pagesoraround four andahalfmillionwords. would It speeches, papers, 62working closeto 200consultation documents, justunder100blogs andover 100statistical re What adifference ago, makes. A a century theBankissuedonespeecha century year.In 2016alone, itissued80 6Aand6B). (Charts the world’s majorcentral banksinthemainnewspapers, thesehave alsobeenonasteadily-rising trend over time 20 . It shows anexponential. It increase. 21 . - - www.worldcommercereview.com bank andholdthemto account. They fulfilademocratic demand for accountability Second, transparent communications improve ofthecentral ofoutsideagents to theability assesstheperformance benefits of communications from arising improved understanding. strategies across central banks the course oftheeconomy orboth. orthecourse ofpolicy That differences isdespite sharp often in communication This suggestscentral bankannouncements are asignificant source ofinformation to financialmarkets, eitherabout these assetprices. andcorporateadjustments inequity alongtheyieldcurve, bondprices, intheexchange rate andinthevolatility of for the delegated party to makewisedecisionsinthefirstplace,knowingfor theywillbeheld to account thedelegated party this way, initiatives transparency canalsohelpimprove theeffectiveness ofeconomic policy ple, might informationIn helpshapeinflation expectations. onthetarget policy orinstrument paths for monetary Improved information abouttheeconomy may alsohave oreconomic policy aneffect on expectations. For exam- These conceptual benefits, improved understandingandtrust, are fairly well-understood, ifnotuncontentious the ex-post benefits of central bank communications from arising improved trust. prisingly, that central bank announcements cause significant movements inassetprices cial markets, usingevent-studies often around thetimeofkeyannouncements. This hasconcluded, unsur perhaps The seamofresearch richest hasfocussed onwhetherandhow central bankcommunications have affected finan- where theexisting evidence baseissparse. some –ofthesebenefits. Let mesetoutsomeof the keylessonsfrom that literature, before identifying places thecourseOver ofthepastcouple ofdecades, evidence a bodyofempirical hasbuiltupto assesssome–butonly 27 . It isdifficult to say,. It definitively, whetherthese strategies have improved theeffi- 23 . They alsoincrease incentives 26 . For example, theycause 22 . These are theex-ante 24 . These are . These 25 . - www.worldcommercereview.com the focus ofcentral bankdeliberations andcommunications. from writtenthese methodscanbeusedto central extract bankmaterial thekeythemes andissuesthat have been crucial to that understanding. For example, thisimproved theFed after begangiving press conferences in2011 tary policy tary thistask. well themediaperforms There isevidence themedialeadsto abetter understandingoftheECB’s mone the factors that influencethe factors how themediaintermediate central bankmessages A third strand haslooked at therole ofthemediainintermediating central bankmessages. Studies have examined gests they have a good understanding of how monetary policy behavesgests theyhave policy agoodunderstanding ofhow monetary A second strand hasassessedhow central bankcommunications affectprofessional forecasters. The evidence sug- ble conjecture. given function, that withwhichassetmarkets fundamentals are Butthat isnotanunreasona unobservable. ciency - and phrases usedby central banks, andothertext-mining using semantic-modelling techniques As thenumberofcentral bankpublications hasexpanded, anewstrand ofresearch hasbegun analysing thewords bias opinion companies andconsumers around thesetargets mentparticipants, offormal inflation targets havingmarket offinancial helpedanchortheinflation expectations andininfluencinginflationinflation dynamics. expectations Generally thispoints speaking, towards theannounce A related frameworks literature andcommunications strategies ofmonetary haslookedat theimpact inshaping sions And central bankcommunications have beenfound to contain information deci- that future canhelppredict policy 30 . 33 . ButintheUSandGermany, there isevidence themediamay sometimesimpaircommunication and 34 . 31 . 28 . Central bankcommunications have been 32 . There ismixed evidence onhow 35 . For example, 29 . - - www.worldcommercereview.com unemployment rate of timespent discussingthistopic pickedupin2013,theyear that theMPCissuedforward guidance linkedto the 8Aand8Bfocusexample, onthetopic ofthe Charts market’‘labour intheMPC’s minutes. They suggestthefraction topics. policy These canbeusedto quantify how muchemphasisanissuehashadincommittee deliberations. For haveAcademics McMahon monetary Stephen usedsemantic techniques HansenandMichael to identify particular ies – Markets (M),Economistsies –Markets (E)andNews (N)–rather thanthegeneral public. studiesofcentral Empirical banks Second, studieshave focussed ofcentral onthe impact bankcommunications onthekeyinformation intermediar fostering understandingrather thantrust. accountability benefits.In other words, evidence empirical has focussed onthe role of central in banktransparency There isfarlessevidence assessingwhether opennessinitiatives have affected –theex-post central banklegitimacy First, ofstudieshave thevast informational majority focussed benefits of ontheex-ante central banktransparency. tential benefitsof central bank communications? Three standout. forecastsmacro-economic and, to somedegree, what themissinglinkswhenassessing thepo mediareporting. So have delivered somesignificant stabilisation benefits, mostnotablymarkets, forfinancial inflation expectations, Taking thisliterature together, itsuggeststhegreat forward incentral strides over banktransparency recent years bers devoted to thistopic. the point theUSdownturn took hold, althoughthere was asignificant variation inthetimedifferent FOMCmem- ber devoted to thistopic, shown intherange. more aboutrecessions talking atThe medianFOMCmemberstarted lated to ‘recession’. With individualFOMCtranscripts, we canalsotrack how muchtimeeachindividualFOMCmem- 9Aand9Bdothesamefor theFOMC’sCharts deliberations, focussing ongroups ofwords from FOMCtranscripts re 36 . - - - Chart 8A. Word cloud for ‘labour market’ topic in Chart 8B. Fraction of MPC minutes devoted to MPC minutes ‘labour market’ topic

Source: Bank of England calculations based on methodology of Hansen, McMahon and Source: Bank of England calculations based on methodology of Hansen, McMahon and Prat (2014). Prat (2014). Notes: Each word cloud represents the probability distribution of words within a given Notes: The procedure estimates the allocation of each month’s MPC minutes to a topic topic; the size of the word indicates its probability of occurring within that topic. which we label ‘labour market’. The chart shows a three-month moving average. Chart 9A. Word cloud for ‘recession’ topic in FOMC Chart 9B. Fraction of speaking time devoted to transcripts ‘recession’ topic in FOMC meeting, by speaker

Source: Hansen, McMahon and Prat (2014). Source: Hansen, McMahon and Prat (2014). Notes: Each word cloud represents the probability distribution of words within a given Notes: The procedure estimates the allocation of each speaker’s time in the FOMC topic; the size of the word indicates its probability of occurring within that topic. transcripts to a topic which we label ‘recession’. The chart shows a three-month moving average of the results for the first day of each FOMC meeting. The three lines show the proportion for the median FOMC member and the range around it. Shaded areas are NBER-dated recessions. www.worldcommercereview.com Depression andtheGreat Recession Pessimistic popularnarratives have been usedto contraction explain ofspendingat thesharp thetimeofGreat ly, behaviour. for macro-economic andfaster thaneverspreading previously. further This matters for individuals’ feelings anddecisionsand, potential- spread beyond atippingpoint. And inaworld media,thesepopularnarrative ofmodern epidemicsare probably spread word by word, mailby mail, Tweet by Tweet. They obey the samelaws ofmotion asepidemics, withviral istheultimateStory-telling isnomore communications thanasequence device. ofstories. History These stories be expected tobe expected have dividendamongthe harder-to-reach thematransparency earned general public. That divi- Even literature iftheempirical issparse, thegreat leapsforward incentral bankopennessover recent years would Understanding andtrusting central banks iftheyarealso presents ableto shapeandshepherd opportunities thesenarratives through adroit communications. and spread for may beincreasingly understanding theeconomy. important This Butit to posesrisks policymakers. ‘popular narratives’ inshapingthepublic’s anddecisions expectations between people. For example, therecent Shillerhasemphasisedtherole of work ofGeorge andRobert Akerlof little ifany attention hasbeenpaidto informational someofthericher channelsthrough whichnews might spread Third, ofcentral whenitcomes onthetrustandunderstandingofpublic, to assessingtheimpact bankactions society wellsociety orpoorly spending andsaving intheeconomy. And itisthepublic whodecide, ultimately, whethercentral banksare serving have beendominated by MEN. This isanotablegap. isthegeneral publicwho, It ultimately, makedecisionsabout 37 . 39 . With popularnarratives more theirsource virulent thaninthepast, tracking 38 . www.worldcommercereview.com asked thegeneral publichow muchtheytrusted variousprofessions What istrueof institutionsappearsto betruetoo of theeconomics profession. Arecent pollby YouGov intheUK came rather earlier. ten coincident withtheglobalfinancialcrisis. The BankofJapanhasbeenan exception,crisis althoughitsfinancial major central banksover theUSandeuro area, thepastdecade. theUK, trusthasfallenover In that period, of- economists. itiswithcentral 12shows So banks. somemeasures oftrustorconfidence Chart inthe four ing (lotsof) trustininstitutionsislow,If andiftrustineconomists islow, thebackdrop isnotpropitious for institutionscontain- someone worse offthan you –inthiscaseit was politicians–butthe overall isdiscouraging. picture list, well below scientists, historians, weather forecasters commentators 11). andeven (Chart sports There isalways 2012. In theUKandUS,thisgapisaround2012. In 20percentage points the general public averages 15percentage points globally, having beenaround 9percentage points asrecently as elites andamongthegeneral (whichhasheldfirm) public(where ithasfallen). This trustgapbetween elites and The source ofdwindlingtrustisitself revealing. awideninggapbetween trustininstitutionsamongthe reflects It latest survey, down from over 40%afew 10). years ago(Chart fewergeneral publictrusted thesebodies. theUK, than 30%ofthepopulation In trusted theseinstitutionsinthe that publictrustinbusinesses, government, NGOsandthemediahasfallensharply. 2016,onlyaround In halfofthe Trust in institutionsgenerally hastakenabody-blow over thepastfew years. suggests The Edelman globalsurvey functioning. There isdisappointingly littleevidence ofeither. dend might taketheform ofimproved trustincentral banksby thepublicandanimproved understandingoftheir 40 . 41 . Economists were towards thebottom ofthis Chart 10. Trust in institutions in the UK Chart 11. Trust in professions in the UK

Source: 2017 Q1 Edelman Trust Barometer. Source: YouGov, February 2017. Notes: Years refer to the date on which survey fieldwork commenced. Chart 12. Trust/confidence/satisfaction with central banks

Sources: Bank of England, Eurobarometer, Gallup, Bank of Japan Notes: The US Federal Reserve line shows a Gallup poll of confidence in the economic leadership of the US, the ECB line shows a Eurobarometer measure of trust in the ECB, the BoJ line shows an opinion survey of confidence in the Bank of Japan and the BoE line shows TNS Survey results on satisfaction with the Bank’s performance. www.worldcommercereview.com vided guidance about the future path of monetary policy.vided guidance aboutthefuture path ofmonetary This guidance was aimedexplicitly at reducing uncer understanding.In thesummer of2013,theMPCpro Let megiveexample to illustrate aspecific policy this(lackof) ofgovernment. MPC orthinkitispart around whosetsinterest halfofthegeneral publicdo notknow rates. Almost ahalfhave eithernever heard ofthe set of economic policy questions set ofeconomic policy 2013,PaolaIn andthegeneral public ona and Luigi Sapienza ofeconomic experts asurvey Zingalesconducted arethese fractions disappointingly low. around a quarter believe anddecisionsinterms theycanunderstand around itexplains itsactions aquarter the BankofEnglandhasagoodunderstandingeconomy. This isthegoodnews. The badnews isthat only Turning to central banks, itisagoodnews/bad news story. surveys, around In 60%ofthegeneral publicbelieve if anything, even larger whenitcomes to economic issues. nomic opinionincreased thegeneral public’s senseofscepticism. That gapbetween elites andthegeneral publicis, answers. Tellingly, thesedifferences were largest inthoseareaswere where eco mostin agreement. experts Expert mists andthepublic. Butthere to rather appears be more ofagapthanmostuswould have expected” attitudes towards inflation. He willprobablyconcluded then:“there always acommunications be econo gapbetween we fromIf turn trust to understanding, ofpublic issimilar. thepicture asurvey Shillerconducted 1997,Robert In inflation, whileonly10% could doso for GDP macroeconomics.concepts inmodern-day Only16%ofthegeneral public could definewhat clearly was meant by by theBBCin2011askedpublicaboutmeaningofwordsA survey ‘inflation’ and ‘GDP’,two the central since, there islittleevidence thisgaphasclosed. 44 . Notonlywere there large differences andthepublicintheir between experts 43 . For central banks, whosestock-in-trade isinflation andGDP control, 45 . On monetary policy, . Onmonetary 42 . In the period theperiod . In - - - - www.worldcommercereview.com mini-metamorphosis appearstomini-metamorphosis have takenplace over recent among trustininstitutions years, inparticular ies have shown offorms that trustcantakeavariety andcanchangeshapequite fundamentally over time. Sucha tary policy correctly policy tary found respondents withhighereducation orincome were more likelyto answer questionsabouttheECB’s mone Trust hasbeenstudiedextensively by philosophers, sociologists andanthropologists over many years (a) The changing nature oftrust to haveother factors played arole, for central banksandmore broadly. sis andtheslow recovery from itare likelyto have beenonefactor, butnotthewholestory. Let mehighlight three common across banks, business, government, themedia.Nonetheless, what explains thesetrends? The- financialcri in, central bankshasimproved. These trustandunderstandingproblems are notuniqueto central banks–theyare This isapuzzle. Despite ahugeincrease inthevolume ofcentral bankreporting, neitherunderstandingof, nortrust comes orwithoutacollege degree policy are lesslikelyto understandmonetary also identified where theseunderstandingproblems are mostacute.respondents withlowerIn theUS,survey in- theUSandeuroIn area, have surveys found asimilarlackofunderstandingcentral bankactions. They have less confident asmore confident aboutthe economy (Table 2). ofhouseholds.Moreover, around one-fifth even amongthosehouseholdswhoheard theguidance, asmany felt eral public. This painted amixed picture. The Bank’s messagegotthrough to around 75%ofcompanies, butonly theguidance onthegen- after hadbeenissued,The withtheaimofassessingitsimpact asurvey Bankconducted document. accompanied by acommunications planfocussed onthegeneral public, andapublished including interviews TV amonghouseholdsandcompanies,tainty withsimpleandclearlanguageaboutthefuture path ofpolicy. was It

47 . 46 . In theeuro . In area, aDutch survey 48 . These stud- . These 49 . - Table 2. 2013 forward guidance survey results

Effect on expectations for the next change in Bank Rate Remain low for longer No change Rise sooner than Don’t know than previously previously expected expected Percentages of households 23 43 13 22

Percentages of companies, survey by 45 (47) 34 (31) 14 (19) 7 (4) Markit (Bank’s agents)

Effect on confidence Much more Slightly more No change Slightly less Much less Don’t confident confident confident confident know Percentages of households 1 14 56 12 4 13

Percentages of companies, survey by 7 (12) 51 (62) 39 (24) 3 (1) 0 (0) 0 (0) Markit (Bank’s agents)

Sources: Bank/GfK NOP survey and Markit. See February 2014 Inflation Report for more detail on the survey questions. www.worldcommercereview.com tions have argued that agoodchunkofsociety’s success over canbeattributed thisperiod to theseinstitutionalfounda- well.This society institutionalstructure, Notleast, itlasted inthemain,served for several hundreds ofyears. Some a degree ofcontrol andfinancialaffairs, over wasasource monetary of comfort. few ofthemunderstood what itistheseinstitutionsdidandwhy. And having atrusted third-party, ableto exercise institutional. ofinstitutions,The liketheFed actions were andtheBank, trusted by thegeneral public, even when The traditional modeloftrustwas simpleone. afairly To asignificant degree, it was anonymous, centralised and tential hasnotescapedthenotice industry. ofcentralBoth are banksorthefinancialservices DLT exploring asa istoo soonto tellIt whetherDLT willrevolutionise ingeneral andmoneyinparticular. financialservices Butitspo is distributed, personalised, socialised. to conferability withouttheneedfor ortransaction trustonacommodity acentral institutionfor verification. Trust has expanded massively, well beyond crypto-currencies. What differentiates DLT from earlier technologies isthe (DLT) firstcame to prominence Since through then,the range ofapplications Bitcoin, ofDLT thecrypto-currency. Latterly, there are justthefaintest signs that could bechanging. The Blockchain orDistributed Ledger Technology central banks. this trustwas delivered inacentralised, institutionalisedand, to alarge degree, anonymised way, namelythrough –money.hearts Money, fiat money, certainly relies for its existenceIn many ontrust. countries over many centuries, One example ofthat trend concerns many acommodity thousandsofyears oldandone closeto central banks’ social rather than institutional, personalrather thananonymous. becauseadifferentlenged, at leastinpart, modelisemerging inwhichtrustisdistributed rather than centralised, 50 . Latterly, however, there are signs thesefoundations have to subside. started And institutionsare beingchal- - www.worldcommercereview.com US andUKhouseholds public. As recently as2000,circulation ofpaid-for dailyandSunday newspapers was equivalent to around 60%of stream media– TV, newspapers, radio –acentral role infiltering, assimilating andpropagating information to the ods by which information isintermediated. The traditional modelofinformation intermediation gave themain- Accompanying, andcontributing, changesinthemeth- oftrusthave inthestructure to theseshifts beenimportant (b) The changing nature ofmedia well above Eurostar orJetBlueairlines personalised trust. BlaBlaCar isonly11years more oldbutalready thanfour transports millionpeoplepermonth, BlaBlaCar. This amongstrangers, isadistributed modelofriding-sharing by alsounderpinned feedback ratings and Or consider travel. Everyone hasheard ofUber–itselfadistributed trustmodel. Fewer peoplehave heard of uation iswell above capitalisation themarket ofestablished, centralised, hotel andHyatt. chainssuchastheHilton pants withpersonalisedtrust. AirBnB isonly9years oldbutalready hasover three estimated millionlistings. val- Its distributed modelofaccommodation amongstrangers by isunderpinned feedback- ratings whichendow partici Take for themarket accommodation. This hasbeentransformed by theemergence ofAirBnB. This or peer-to-peer and personalised. ness modelsare by underpinned trustbetween buyer andseller, producer andconsumer, trustwhichisdistributed es. We have seentherapid emergence interactions andtransactions. ofbusinessesbuiltonpeer-to-peer These busi- model ofdistributed trusthasalready fundamentally andbusiness - reshaped anumberofotherproducts, services aboutagenuinetransformationbring ofmoneyandfinance. One reason to thinkthispossibleisbecauseasimilar means ofreconfiguring financialinfrastructures. Andsomebelieve thisnew technologyofdistributed trust could 52 . 51 . www.worldcommercereview.com an philosopher and writer Marshall McLuhanan philosopherandwriter Marshall first told us over 50 years ago, isthemessage. themediumoften thanmight firstappear. in media channelslessimportant makes theseshifts Butlookscanbedeceiving. As Canadi- ofcourse,Online andsocialmediaoften, gettheirinformation from mainstream media. This, itcould be argued, Meanwhile, centralised sources ofnews have seentrustwane andwithit usage. mation andnews. This islikelyto have beenatwo-way process, withtechnology shapingtrust andtrusttechnology. trust-building hasbecome distributed, personalised andsocialised, sotoo have mediamethodsfor conveying infor inmediamethodsisthemirror-image somerespects, thisshift ofchangesinthenatureIn oftrust-building. As adults, mainstream socialhas usurped media. this astheirmainnews source, for thefirsttimemore thanTV found that more thanhalfofall18-24year oldsusedsocialmediaasanews source used andmore thanaquarter Within online, rapidly socialmediahasbeenrising asanews source. Arecent studyintheUK Reuters Institute 10% from newspapers. dominate asanews source 13).Butfor (Chart thoseunder-50, around halfgettheirnews onlineandfewer than Americans getnewsAmericans regularly from aprintnewspaper This lossoftrustinmainstream ofhow peoplereceive mediacanalsobeseeninsurveys theirnews. Only20%of pronounced amongyounger agegroups.been particularly third oftheUS population cline intrustmainstream media.Arecent trustinthemassmediahadfallento lessthana poll reported Gallup The pastfew years have intheway seendramatic shifts news isreaching thepublic. ofthismay ade Some reflect 53 . This compares ofthecentury. withmore thanhalfat thestart This declineintrusthas 54 . For thoseagedover 50,thetraditional mediacontinue to 55 . areThese fractions similarintheUS.Among young - - Chart 13. How Americans of different ages got their news in 2016

Source: Pew Research Center (Barthel et al, 2016). www.worldcommercereview.com opinion hasbecome asource ofscepticism rather thanreassurance. The well-directed Tweet hasdisplaced the including by central banks. Complex languageisthese days more likelyto breed mistrustthanmystique. Expert Today, thesituation isdifferent. Trust ininstitutionshasbeeneroded despite a great dealmore beingpublished, tence. As was reassuringly Stella expensive, Artois central bankswere reassuringly inexpansive. Complex languageaddedto the ‘mystique’ ofinstitutions, includingcentral banks, andasa sign of technical compe lem. Littlewas published, even lessread. Public discourse was infrequent andattentive audiences were narrow. ‘Twas notever thus. Once uponatime, whentrustininstitutionswas high,complex languageposednotrustprob oneoftheseboxes:every personalised, andshrill. socialised, sharp distributed, short, shriller, andwiderreach, aidedandabetted withhigherimpact by newmedia lic language. As Mark Thompson discussesinhisrecent publiclanguagehasbecome shorter, book, and sharper inthenatureOperating alongside theseseismicshifts ofmediaandtrusthave beenequally-large inthepub shifts (c) The changing nature oflanguage this isoldnews, newnews orfakenews. a self-reinforcing fashion. They makefor larger, louder, hermetically-sealed echochambers. And that istruewhether to propagate faster andfurther. They meanpopularnarratives are likelyto emerge in andspread faster andfurther These newmediachannelsmake, then,for adifferent process ofnews meanitislikely Social networks transmission. ential. The echoesinthischamberare louder, reach further, lastlonger. news and informationIt makes personified.for news andnarratives which tend to beself-reinforcing andself-refer using search algorithms. These tailorthecontent to anindividual’s tastes andpreferences. Quite literally, thisis For onlineandsocialmedia,information from mainstream sources beingfiltered isoften andpurified, sometimes 56 . Twitter, asamediamedium, ticks - - - - www.worldcommercereview.com one well-known measure oflinguisticcomplexity, theFlesch-Kincaid reading grade score , Governors’ InflationReport from thequarterly over speeches)andassessestheirlinguistic complexity uses time. It For 14takesasetofregular example, BankofEnglandpublications (MPCminutes, Chart MPCstatements, excerpts applied to central bankpublications. The theypaint one. picture isasobering thank-you note well-argued speech,theFacebook ‘like’ theapproving newspaper review, thesmiley-faced emojithehand-written of these metrics areof thesemetrics basedonword andsentence length,theuseofdifferent wordtypes etc us to measure thelinguisticcomplexity ofwritten andspokenmaterial. For example, someofthemore widely-used These views are instructive, butsubjective. More measures objective have been developed, however, that enable impenetrable waffle”it as“worthless, and“gobbledygook” between thelines,. Reading Iamnotsure theylikedit. tended to beasimplifiedandsanitisedaccount oftheMPC’s judgements. The Campaign for Plain Englishdescribed grammarians, itsattention turned to theBankofEnglandMPC’s Policy Statement. Monetary This statement isin- howSo well docentral banksfare onthat front? thisyear, Earlier theCampaign for Plain English,amilitant bandof rather thandividepublicopinion,that illuminate rather publicdebate. thandarken charged. inwordsThat meansspeaking andsentences that landrather thanlevitate withthepublic, that connect themselves understood,tutions making despite (indeed, because)ofthetechnocratic taskwithwhichtheyare That changeinthenature ofpubliclanguage–shorter, simpler, -putsaneven shriller greater premium oninsti- azine andpoliticalspeeches). lications are compared publications (broadsheet withasetofexternal andtabloidnewspapers, theEconomist mag- 57 . 59 . These central bankpub 58 . These canbe metrics - Chart 14. Flesch-Kincaid reading grade level of BoE Chart 15. Flesch-Kincaid reading grade level of US publications Fed publications

Sources: Nexis, Bank of England calculations Sources: Nexis, Bank of England calculations Notes: Newspaper and journal content matches a search for ‘monetary policy’. Notes: Newspaper and journal content matches a search for ‘monetary policy’. Chart 16. Flesch-Kincaid reading grade level of other Chart 17. Percentage of adult population for whom Central Banks Elvis lyrics and 2016 communications are accessible

Sources: Nexis, Bank of England calculations. Source: Bank of England calculations. Notes: Newspaper and journal content matches a search for ‘monetary policy’. www.worldcommercereview.com metrics allowmetrics anestimate ofthat fraction. cause oftheirlanguage?Given rates data ofliteracy onthedistribution across thepopulation, linguisticcomplexity complexity comes. For example, ofthegeneral what publicare fraction central bankpublications excluding be a technocratic space withitsown technical language. onthe reflecting Nonetheless,costs at whichthis itisworth Taken at face value thesescores are interesting, notaltogether ifperhaps surprising. After all, central banksoccupy around 14,well above 16). thelevels publications (Chart ofexternal ofothercentralat aselection banks’ Englishlanguagepublications, we seethesamepattern. scores Reading are for campaign speechesby election President Trump. They are 11years aheadoftheaverage Elvissong. we If look publications, ofaround 5years withmainstream newspapers, 8years for politicalspeechesgenerally and13years Nonetheless, there incommon isamaterial withthe Bank, reading grade gapbetween central bankandexternal pared to around 14-15for MPCminutes. grade score thanBankofEnglandones. For example, FOMCminutes have areading grade score ofaround 17,com- and Financial 15suggests Fed Times andUSpoliticalspeeches).Chart publications tend to have ahigherreading andcompare summaries) publications Book (theNewYorkBeige thosewithsomeexternal Times, Washington Post We candothesameexercise for ofFederal aselection publications (FOMCminutes, Reserve speechesby theChair, years aheadof the average Dickensnovel. 4 years aheadof tabloidnewspapers andaround 6years aheadoftheaverage politicalspeech. They are around 5 number ofyears. linguisticcomplexity terms, In that putsthemaround 2years aheadofbroadsheet newspapers, to beunderstood,pected onaverage, by someone agedaround 20. They have beensteady around thislevel for a Bank ofEnglandpublications have anaverage reading grade score ofaround 14–that isto say, theywould beex - - www.worldcommercereview.com have beenlongsince solved. isnot. As hasargued, philosopher Onora O’Neill does It simplyaddingto reporting Which tools andtechniques? Were thissimplyacaseofproducing more, trustandunderstandingproblems would A new frontier for central bankengagement to closethosetrustandunderstandingdeficits, central bankswillneednew tools and techniques. for ofsociety whommistrustandmisunderstanding arereach most acute. thoseparts To reach that wideraudience, of publictrustandunderstandingontheother. Conventional meansofcommunicating are unlikelyto beableto Herein liescentral banks’ tideofcentral challenge:arising bankcommunications ontheonehand, aretreating tide ly constrained reach amongthosesame cohorts. banks –for example, theyoung andlesswell-off.Mainstream mediacanhelpmediate, buttheyhave anincreasing- Perhaps unsurprisingly, thesetend to bethesame segments withleasttrustandunderstandingofcentral ofsociety areThese fractions low. Around 95%ofthegeneral publicare likelyto find central bankpublications inaccessible. 10% oftheadultpopulation. ens novels to around 40%andnewspapers to around 30%.BankofEnglandpublications are accessible to lessthan rate intheUKandUSimpliesthatcy politicalspeechesare accessible to slightly lessthanhalfthepopulation, Dick According to OECDstudies, levels intheUKandUSare ofliteracy notgreatly dissimilar the USadultpopulation. FOMCminutes are accessible to onlyaround 2%. reach around summaries Book fewer 20%.Beige policy mainstream than10%of US press whendiscussingmonetary around 70%of the USadultpopulation, an Elvissongaround 60%,politicalspeechesalittlelessthanhalfandthe central bank and external (Chart 17) central (Chart bankandexternal Using data from survey, theUSnational adultliteracy we canestimate thepenetration rate ofvariouspublications, 60 . This suggeststhat acampaign speechby President Trump isaccessible to 61 . Assuming thesamelitera- - www.worldcommercereview.com mation by words ofthereceiver was reduced ordigits. onthepart hedefinedit Instead by whetheruncertainty onesense,In thisisnotanewpoint. ClaudeShannon,thegrandfather ofinformation theory, didnotdefineinfor words andnumberscould even from detract trustandaccountability. little for accountability andtrust-building land or its policy committees.land oritspolicy tothe workaday thespeculative. Even more thanusual, thespeculative ideasare nottheviews oftheBankEng- What newtools andtechniques might helpachieve thiswiderengagement? Let meoffer a few ideas, ranging from derstanding, atwo-way door. Conversation meansears asmuchmouths. maybasis aspossible. involve It listening understandingofthepublic asmuchpublicun- asmuchspeaking, communication thanconversation, thanengagement, ideallyon aspersonalisedandlocaliseda lessaboutedicts These days, buildingtrustandimproving understandingmay require adifferentIt may approach. belessabout means mouths. congregation, enhanced education ofaninattentive audience, door. asmoothlyswinging one-way Communication The questto improve communications makessense. Butithasmore thanahint ofbetter to sermons theassembled of central banks–may ofwhat failasadescription isthese days required to buildtrustandimprove understanding. Even theterm ‘central bankcommunication’ –amainstay andacentrepiece ofcentral banking ofacademicstudies information, andimpairing understandingandtrust. ing uncertainty can bedisinformation onShannon’s For criterion. achunk ofsociety, may volume beincreas ofreporting - thevery receivers are by thedepth,discouraged overwhelmed andbamboozled by by thedensity thecomplexity, reporting 62 . If reports are mostlyunread reports orunreadable,. If peopleinmore smothering 63 . If . If - www.worldcommercereview.com reaching that someofthat wideraudience. point. thepastyear Over orso,starting theBankofEnglandhasdiversified itsstableofpublications, withaview to Mark cohorts, Thompson’s andsimpler–may synopsisofthechanging beagood form ofpubliclanguage–shorter themessageandmediummatterBoth here. For thewiderpublic, especiallytheyounger andthelesswell-off reach ofcentral banks, suchastheyoung andthelesswell-off. by someof theanalysis we already produce. currently focus Butitmay outof callfor onthosecohorts aparticular This doesnot meanwe shouldstop communicating withourcurrent audience. Their needsmay bewell-served and layered to meetthedifferent needsofdifferent cohorts. gaging withthem.Onesize willnot fitall. That probably meanstheneed for engagement policiesthat are targeted Having identified thedifferent folks, itisthenaquestionofapplyingdifferent strokes to communicating anden- tively easilyrectified. relations 101. Yet itisone lessoncentral bankpublications may, historically, have failedfullyto heed.so, If itisrela- distrust, theirappetite for information andtheirpreferred meansofreceiving it.your Knowing audience ispublic standing ofthesedifferent folks isneeded:their concerns, their constraints, theirdegrees ofunderstandingand This suggeststhat, asafirst step inany programme ofimproved central bankengagement, animproved under public are anything butmonolithicintheirabilitiesandappetites. They are different folks. sense ofaggregate behaviour. When itcomes to central intheseterms isunhelpful. bankengagement, thinking The areMany brought macro-economists therepresentative uplearning agent model, asasimplified way ofmaking (a) Different strokes for different folks - www.worldcommercereview.com The changing nature ofpubliclanguagemeanscentral bankswillneedto adapttheirown languageto increase its your(b) language Minding Ishallresist the temptation tothe start. say itisgoingto begreat. their lengthandcontent, themaccessible potentially just to 18).Butthisisclearly making awideraudience (Chart the Federal System, Reserve are investing. The Bank’s existing publications are now more flexible andlayered in These are examples oflayered andtargeted content, thelikeofwhichanumberothercentral banks, including coalface. days. Butitisearly nor doestheBankhave ofBloggersand acohort Vloggers providing oftimespent dailydiaries at thecentral bank tions. The Bankhasa Twitter account withover 200,000followers. donothave Individuals Twitter accounts and alised, socialised, distributed communications medium,withhighpenetration amongtheyoung, ithasreal attrac incommon withmanyThe Bank, othercentral greater banks, ismaking useofsocialmedia.As atwo-way person- the UKadultpopulation. istargeted,It explicitly, reading at score younger Its agecohorts. of8meansitiscapablereaching almosthalfof economy works andhow central andvideosas It well asprose. bankpoliciesmaycontains cartoons beaffecting it. The Bankintroduced lastyear Bank’.‘Knowledge This islargely intended asaneducational device, covering how the of thepopulation). length (under1,500words) andgreater reach (reading grade scores of9meanthat theyare accessible to upto 30% hits. The mostpopularare amongstthebest-read ofany Bankpublication. That isprobably helpedby theirshorter more opinionated thananything theBankhadpreviously published. far, So theblogshave received over 700,000 2015theBankbeganastaffblog,In BankUnderground. This was intended to beshorter, simplerandsomewhat - Chart 18. Dispersion of Flesch-Kincaid reading grade for 2016 Bank of England publications (minimum, first quartile, median, third quartile and maximum)

Source: Bank of England calculations. www.worldcommercereview.com tional. to stickthanthosethat are anonymous. And messages that are local are more likelyto stickthanthosethat are na- narratives are more likelyto stickthanthosewrapped innumbers. whichare Messages arepersonalised more likely and adjectives general,In isimproved the readability oftext thelarger thenumberofnounsand verbs and thefewer theadverbs warms themup. ‘Annuity’ deepfreezes thepublic, whereas ‘investment’ thaws dramatic difference to readability. andemployment’ ‘Inflation leaves ofthepublic cold. themajority ‘Prices andjobs’ say, thefear oflongwords. And ifyou chokedonthat lastsentence, sonow might you. Simplewords canmakea For example, likemany othersIsuffer from anacute caseofhippopotomonstrosesquipeadaliophobia –that is to who have considered how to shapelanguageto improve itsreach. comes at acost interms ofaccessibility. Fortunately, there isalarge literature, ofgrammarians, andasizablecohort paragraphs. Currently, central banksscore technically, poorly becausetheyare themselves technicians. inpart This technicalBy Imeanthecomplexity ofthelanguageused–lengthandcomplexity ofwords, sentences and The firstiseasier to fix. penetration andreach withthegeneral public. There are two elements to this–thetechnical andthebehavioural. sender. Behavioural science hasgiven ofinsights into usplenty how to dothat The behavioural dimensionto publiclanguageinvolves inways thereceiver speaking whichbestconnect withthe myverbs inanElvissongis3.3.In andadjectives speechesitis2.7. more frequent nounsandverbs andthelessfrequent adverbs andadjectives. The ratio ofnounsandverbs to ad- 65 . This oldmantra remains trueintheFacebook age:Facebook postsare more likelyto beshared the 64 66 . . Messages wrapped inreal-world. Messages www.worldcommercereview.com a number, was anecdote It drawn oreven from achart. avisitImadeto inNottinghamat asetofcharities atheory words, thebest-remembered singlesentence, by far, didnotconcern my views onGDPorBrexit was not orQE. It ing 2016,Iwrote anumberofspeechesontheeconomy, probably totalling over 50,000words. From that massof Localising alsomakesiteasierto convey information stories asconnected rather data. thanasdisconnected Dur regions, ofsociety. andcohorts sectors excuse for central banksnotmonitoring andunderstanding, ofdifferent continuously andindepth,thefortunes nationally, andcentral to banktools redress may beill-equipped regional differences, ordistributional that isno standing theeconomy andlocalising messagesabouthow itisperforming agents intheUKiscrucial. More generally, for analysis oftheregional under splitisimportant anddistributional help.Localising themessagecancertainly Here, thework oftheregional Feds intheUSandBank’s regional ing trustandimproving understanding. building. The viewfrom 30,000feet canfeel alittledistant. Excel spreadsheets donotemote. This caninhibitbuild- rather to thananecdote-based. befact ishardThat acost. to isallwell It engagewitha andgood. But itdoescarry ble reasons, theyhave tended to have anational rather thanlocalfocus, to weigh over theobjective the emotional, Yet flow localisedandpersonalisedmessagesoften lesseasilyfrom themouthsof central banks. For understanda- ‘nudges’ appearto work ance to discouraging from crime; encouraging giving charitable to discouraging sugarconsumption. Linguistic from encouragingeverything taxpayments to discouraging emissions;from carbon encouraging schoolattend - found settings: in to increase theirreach, ofpublicpolicy on,inawidevariety andtheirchances ofbeingacted These maximshave outinreal-world beenborne experiments. Personalising andlocalising messageshasbeen 67 . 68 . Even though monetary policy acts acts policy . Even thoughmonetary - - www.worldcommercereview.com spread that hastheappearance, (and, viscosity for some, taste) ofthebitumenspread roads. onBritish The situation thisyear,Earlier withdrew oneofthemajorUKsupermarkets from itsshelves Marmite, apopularyeast-based understanding andpreparation. ofeconomic eventsimpact onpeople’s lives asspecificandpersonalpossiblecanheld raise public awareness, ogists experience with female names)would necessarily raise publicawareness greatly. the Nonetheless, making downturn sharp inactivity naming thenext ‘Recession Andy’ (muchless ‘Depression Andrea’ given themeteorol- followingI amnotsuggestingcentral thismeteorological banks shouldstart precedent to theletter. Iamnotsure may have beenalive today. even once istakeninto storm-severity account Even thenamesmatter. ones,The intheUSishigher thanfor death toll hurricanes from male-named female-named This began backin1953. The evidence isthat namingtheseevents hasincreased significantly public awareness. Storm-naming intheUKfollows muchmore) extremeweather ofnaming (very long-standingUSpractice events. steps to preparetaking themselves. retweets. Polling by YouGov suggeststhat, since storms beganbeingnamed, more thanhalfofpeoplehave begun and blowing offseveral people’s hats. Yet advance of Stormwarnings Barbara inspiredtweets 81,000 and4,000 before Christmas, ‘Storm Barbara’ causingwidespread devastation hittheUK, to as many asadozen umbrellas Personalising 2015,theUK’s events In alsohelpsstickiness. Meteorological begannamingits storms. Office Just ever asadhesive. which theytold methere had, for them,beennorecovery. PersonalThat Noamount stuck. ofdata is stories stick. 69 . Had ‘Storm Barbara’ been ‘Storm Brian’, several items ofapparel www.worldcommercereview.com years. domain.Ipersonallyhavein thepublicpolicy been increasing my engagement withtheseschools for thepastfour nothaveoutside ofLondon East, hadany whomight andtheSouth otherwise withtheBankoranyone contact else thaninthepast. Forof partners example, to increase thisyear itsengagement theBankislooking withstate schools ofthisislikelytoSome involve central basiswithadifferent, banksengaging onanon-going andmore set eclectic, for alittlemore conversation andalittlelessaction. it may beagoodtimeto rebalance abiding by thesescales, a to start ‘one mouth,two ears’ -atime, ifyou policy like, they have donebetter at publicunderstandingthanthepublic. As apersonaltrust-building device, But central banks, likemany institutions, have thanlistening. sometimesbeen better at talking Or, putdifferently, posters, podcastsandvideos. have Some amuseum. These are allgreat. cies over recent years. Many have schoolsprogramme, anactive websites witheducational resources, issueleaflets, Many central bankshave towards madebigstrides improving publicunderstanding oftheeconomy andtheirpoli- (c) Public understanding, understandingthepublic more effectively thanany amount of central bankjawboning. Stories,Marmite itself, like stick. with narrative content andpersonaltouch. Arguably, ‘Marmitegate’ raised publicawareness inflation ofrising much general public’s radar thelikelihoodofprices was intheshopsbeginning information ahead. to intheperiod rise It public were allowed to continue theirtoast. tarring This high-profile event did, however, quite helpfullyput on the theevent,In tragedy andsupplierreached was avertedwhenthesupermarket agreement andthegreat British year. Remarkably, ‘Marmitegate’ ledthenews for muchoftheday itbroke. arose becausethe supplierhadincreased significantly theproduct’s price inthelight ofsterling’s depreciation last www.worldcommercereview.com semantic-analytic techniquessemantic-analytic to thewords usedby participants market Working withpsychologists, research to theBankhasundertaken capture sentiment infinancialmarkets, applying UK, partnering withorganisations Council Citizens suchastheMuslim Age ofBritain, UK andtheRoyal partnering UK, National UK, Clearly, to go. there isfurther As ababy step, of a series later thisyear Iamstarting ‘Townhall’ meetingsaround the their topics ofconversation, theirsentiment andtheirpopular narratives ontheeconomy. niques usedto studycentral bankers’ words could beapplied to thewords usedby thegeneral publicto capture analysis undertaken by Nick BloomandSteven by Nick Davisanalysis undertaken incollaboration withtheAtlanta Fed ofsentiment andperceptions isasmuchasurvey asinvestment It cision-making. intentions. This follows previous vey ofcompanies around to assesstheirdegree Brexit thiswas having ofuncertainty andwhat ontheirde impact greaterOne example ofthat ismaking ofsentiment. useofsurveys The BankofEnglandrecently setupanewsur reaching newcommunities innewways morrow, asmuch asincome and jobstoday. thesenewdata callsfor Harvesting adifferent setofapproaches and conversational, thenarrative, theemotionalare thenewdata inthisnewworld –optimismand anxietiesaboutto may theforces doalessgoodjobofcapturing measures ofactivity shapingpeople’s decisions. The qualitative, the aworld ofpopularnarratives,In where emotionsshapedecisionsandwhere stories cansnowball, aggregates useful window ontheworld, onewhichhasshapedmy viewonpolicy. Council toin spirit theCommunity runby Advisory theFederal Personally, Reserve. Ifindtheyprovide anincredibly omy isfaring. This issomethingtheGovernor andIhave over prioritised anumberofyears. These events are similar faith groups andtrades unions, amongothers, different listening to very theiroften onhow perspectives theecon - Recently, theBank’s regional Agents have begunincreasing theirengagement withcharities, socialenterprises, 70 . 72 . More generally, thesamesemantic tech- 71 . - - - www.worldcommercereview.com these techniques to explore how affects thelikelihood changesinthelanguageusedto financialproducts describe familiar from development economics. For example, theFinancial inthe UKhasrecently Authority Conduct used Understanding theresponse callsfor noteasyandoften ofthepublicisoften theuse ofrandomised control trials towards course ofaction aparticular sometimes subtlechangesinlanguagecanbeusedto improve understanding by thepublicandto ‘nudge’ them questions, includingtaxation, regulationpolicy andconsumer choice. particular, In theirwork hasfocussed onhow the UKBehavioural Unit(BIU),initiallysetupby Insights theUKgovernment, hasworked onarange ofpublic For sometime, design by thishasbeenasarea behavioural studyandpolicy ofactive economists. For example, in and prescriptive basis–how shouldcentral banksbecommunicating to bestengagewithawideraudience? have central banksbeencommunicating? An alternative would be to applythese sametechniques onanormative least insofarasresearch oncentral banksisconcerned, thisanalysis haslargely beenpositive anddescriptive –what analysisSemantic hasbeenablossomingarea ofresearch over recent years, includingoncentral But, banktext. at between central banksandthegeneral public to takeplace. niques allow amuchwiderreach at amuchlower cost. They alsoenableadynamicprocess oftwo-way learning ofthefeedback andreach andquantity theyreceive oftheirmessagesandthequality tency onthem. These tech - There are newtechniques andtechnologies becoming available that may helpcentral banksto improve thepo (d) Nudging and gaming sonalised iftheyare to land. about theissuesthat matter for them. These publicevents, likepubliclanguageitself, needto belocalisedandper ofBlindPeopleInstitute (RNIB). Their isto purpose listen asmuch talk andteach, andlearn, to local communities 73 . - - www.worldcommercereview.com a gamecalled ‘Chair theFed’. This is notacampaign isagamethat rally gives by John.It peoplethechance to set of central have banksandgovernment already departments madesteps inthisdirection. The Francisco San Fed has A more sophisticated, anddynamic, approach to elicitingfeedback isby ‘gamifying’ problem. Anumber thepolicy by central banks. ment, there isnoreason theseexperimental methodscould notbeusedto newcommunications trial andpolicies and newapps, amongother things. Although the bar ishigher, would andthetrial needcareful stage-manage through andadaptation. learning These are usedextensively by companies newgames, whentrialling new films Experimental trials, whichsolicitandrespond to are feedback, oneway ofreducing somewhat that uncertainty likely, to often, beunknown. propagate faster thanever. The response ofthiscomplex, adaptive socialsystem to central is bankinterventions increasingly siloedandself-reinforcing intheirbehaviours, shapedby andpopularnarratives socialnorms that crucial whendealingwithcentral banks’ new, wideraudience: more and diffusethanever reactions, intheiractions ownMy senseisthat thisneedsto change. Experimentation andtrialling, adaptation are andlearning likely to be oftheirwords abouttheimpact andactions. of certainty Forscale isarather daunting task. reasons ofcredibility, central feel banksoften theyneedto convey astrong sense That for is, theunderstandable reason at leastinpart, that doingexperiments withthegeneral publiconamacro This approach oftrialling, elicitingfeedback publicpolicy. andthenadaptingisnotcommon inmacro-economic word ‘annuity’ by 25% shrunktake-up of thembeingunderstood andpurchased by retail investors. choosingretirement In income products, useof the 74 . - www.worldcommercereview.com will itaffect choices –savings, spending, working? through newmedia?How willitshapeemotions-optimism,anxiety, exuberance, depression? And how, ultimately, ofthewholeeconomythe fortunes are at stake. Will amessagebeunderstood? whom? How By willitpropagate cess ofthesecentral banknarratives difficult. Andthe right isvery premium ongetting this ismuch greater when that narrative entrepreneurial role hasprobably never Butjudging, beenmore important. ex-ante, thelikelysuc through theirwords,on policy providing ahopefullybenevolent ‘nudge’ to aworld expectations. ofnewmedia, In ratives that propagate across society. Central banksare narrative entrepreneurs, shapingviews ontheeconomy and Shillerhasspoken oftherole playedRobert by ‘narrative entrepreneurs’ incatalysing andshapingthepopularnar realistic psychology would andrealistic notbeaventure policy into theunknown. ements oftheeconomy orfinancialsystem, albeitinasimplified form. Creating agamewith realistic economy, ple would includeSecond Life, Onlineand EVE Minecraft, World of Warcraft. Anumberofthesegamescontain el- There are many existing gamesthat are multi-player andinteractive, many ofthemhugelysuccessful. Asmallsam- to andreactions centralpublic actions bankinterventions, inanexperimental setting. contagion inchoices, across theeconomy. Once thoseare captured, insights thegamecould into offer important communications andchoices, to takeplace. This iscrucialfor understanding thepropagation ofstories, andthe ilar gamecould notbedesigned whichwas multi-person. This would allow interactions amongthepublic, intheir games,These are designed largely effectively single-person for educational purposes. Butthere isno reason asim- hot-seat andinvoke 50onany day Article oftheweek. to steer theUSeconomy. policy monetary theUK, In ‘MyUK’ allows peopleto putthemselves inthePrime Minister’s - - www.worldcommercereview.com game could helpaddress the21 central bankerrather thananinanimate piggy-banker, ifpeople swapped stories as well this perhaps asproperties, tual rather thanphysical, itsmulti-players measured inmillionsrather thanfingers, itsmoneyfrom aninteractive even inpublicpolicy. remains Monopoly as populartoday asitwas inthelatter halfofthe20 nothingelse,If thisepisodeshows role that inpublicunderstandingandperhaps gamescan play animportant will forever books, Magie’s beetched inthehistory haslargely beenlost. Brothers millionsofdollarsinroyalties. $500for Magie earned sellingherpatent. While the Wright Brothers’ patent was ahugesuccess. has goneonto sell hundreds It ofmillions ofcopies worldwide, Darrow earning andParker Darrow 1935,Charles soldanadaptedIn version ofthegameto Parker Brothers underthename ‘Monopoly’. This cess. andwealthadults andchildren income ofrising inequality concentration. ontheperils The game was amodestsuc board to purpose: gamewhich,likeothergamesat educate thetime,property-based hadahigherpublicpolicy Game’. On thesameday, the Wright Brothers filedapatent for thefirstaircraft. ‘The Landlord’s Game’brilliant wasa the day, ElizabethMagie entered aPatent in Office Washington DC tofilea patent foragamecalled ‘TheLandlord’s might betimefor playing central them at theirown banksto game. start Isthisfanciful?114years ago, almostto found difficult–the Facebook generation. Globally, around halfof youngadultsaged18-24play It gamesonline. The useofgamingtechnology may whichtheyhave alsohelpcentral ofsociety banksreach traditionally cohorts cations themonthe andpolicies, real-world. withoutfirstinflicting An for interactive, thetask. ill-equipped multi-persongamemay sometimesbeabetter testbed for newcommuni- greatest challengesinpublicpolicy. existing Our modellinginfrastructure –simplified, objective, static –isprobably Answering thesequestionsinanincreasingly complex, adaptive, system connected liketheeconomy isoneofthe st century’s problems too. th century. Were itvir - - www.worldcommercereview.com setting policy, asisthecaseinanumber ofcentral banks banks amongthewiderpublic. That doesnot mean,ofcourse, that rulescannotplay ausefulinformational role in adherence andtheeconomy to sent analgorithm policy into atailspin, that isunlikelyto enhance trustincentral change. blind at that timesofstructural rulescansometimesbefragile If include thefact andfallible, particularly lic directly more accountable policy wouldAn alternative beto canvass monetary way theviews ofmaking ofthegeneral pub It hasbeensuggested by somethatIt rulesshouldplay amore centralpolicy role inthesettingofmonetary (e) Rulesandreferenda er) and ‘Pingu’ penguin). (thefamouscartoon didates, including ‘Sir David Attenborough’ naturalist), (thefamousBritish ‘Henry Worsley’ explor (thefamousBritish public ballotto chooseanamefor thenew polarRoyal Research Ship. Various options were mooted assuitablecan- The referendum inquestionwas initiated by theNational Environmental andinvolved Research Council (NERC) a a travesty for andat oddswiththewillofpeople. democracy to many. For some, to itwas ofpopulism.Contrary ashamefulexample someclaims, oftheperils theoutcome was infallible. You may have heard referendum there was animportant inthe UKlastyear. The result cameasasurprise But otherthingsare rarely equal. The downsides ofslavish adherence to afixed ruleare also wellunderstood would tend to increase thedegree ofaccountability of, andtrustin,thecentral bankamongthegeneral public. parent. would, Machine ineffect, Other thingsequal,replace man(andtheodd this greaterwoman). transparency are anumberof possiblemotivations for doingso. process Oneisthat simplerandmore itmakesthepolicy trans- 78 . Digital technology meansthisoptionisfeasible. Butwould itbedesirable? Public referenda are hardly 77 . 75 . There 76 . They - - www.worldcommercereview.com cast Tetlock usesevidence drawn from ofexperimental studiesto avariety determine theingredients ofagoodfore That isnotto say, however, that, Philip publicopinionisalways mad.hisbookSuperforecasting In andeverywhere Sometimes, there ismadnessincrowds sea vehicle McBoatface. was namedBoaty purposes. ofpublicpollingfor lessonintheperils This policy isanobject named instead ‘Sir David Attenborough’ -though,inasmallconcession to democracy, itsremotely operated sub- ofasocialmediacampaign. Athome courtesy that point, jettisonedthewillofpeople. NERC The shipwas The winnerofthepublicballotwas noneofthese. With almost80%ofthepopularvote, McBoatface’‘Boaty romped mism that may sometimesaffectthegeneral public. ply too isto great. avoid to anindependent third-party theshort-ter ofdelegating And thewhole purpose policy why? Clearly, neitherrulesnorpollsshouldbefollowed slavishly -thescope for misinformation andmishap issim- rules(andotherdata) dotoday. policy etary What and are thepublictelling usabouttherightsettingofpolicy The information provided process, from asanotherinputto thepolicy-setting thepubliccould serve much asmon- societal stakeholderswhensettingpolicy. woulddistrustful ofcentral opencentral It banksand theiractions. banks’ ears(andeyebrows) to awiderrange of ray bedistant, disenfranchised ofviews from or onthesettingofpolicy, thosewhomight otherwise inparticular way that ofharnessing wisdom. This would allow central banksto listen to apotentially ar muchwiderandricher canvassingRegularly theviews ofthe public, policy, ontheeconomy would andonthesettingofmonetary beone mance ofexperts. there iswisdomincrowds. harnessed, thewisdomofcrowds If andofamateurs canimprove theforecasting perfor 80 . Hefindsthat thekeyliesindiverse perspectives, drawn hefinds, fromOften, amateurs as well as experts. 79 . - - - - www.worldcommercereview.com forecasting theweather ofthegeneral publicto solvethe timeandexpertise problems formations asdiverse and asspottingstarandgalaxy ofcitizens isincreasinglyEmbracing theviews common andexpertise inotherdisciplines. ‘Citizen Science’ draws on as aby-product, alsoimprove andtheeconomy. publicunderstandingofpolicy outofcentral banks’ otherwise help reach, ofsociety feedback andsolicit direct from, thoseparts reach. And itmay, process.ratives additionalinputinto thisinformation would thepolicy could –thenharvesting It beanimportant Nonetheless, ifcrowds, likerules, sometimescontain wisdom–different perspectives, different views, different nar conversing as muchasconvincing, listening astalking. asoften theypreviously ofsociety haveensure theyreach notreached, theparts usingmediatheyhave notpreviously used, previously. As trustandtechnology haschanged, sotoo mustcentral banks. Their latest needsto metamorphosis societal andtechnological shifts, at atimewhencentral load thanever bankshaving aheavier beenbearing policy cumstances andnewresponsibilities. hasdelivered It significant benefits. Butthepast few years have seenfurther tion-cum-revolution incentral bankcommunications over practices recent years cameinresponse to new cir sotoo mustcentralmands shift, bank practices. That what hashappenedover isexactly many years. The evolu- Central thepublic. to As banksare serve thepublic’s publicinstitutions, putonearth norms, preferences andde he scolded “but to explainwhy we have doneit.” How things change. Bank’s by “You Chief Economist Norman: oftheday shrift was given short similarly are not here to tell uswhat to do” plain theBank’s replied: Norman Montagu actions, “Reasons, Chairman?Idon’t Mr have reasons, Ihave instincts”. The Central bankcommunications have come alongway. When pressed by aParliamentary Committee in1930to ex Conclusion derstanding ofscience. What better timefor central banksto begin enlistingthehelpofsomeCitizen Economists. 81 . As well ashelpingsolve theseproblems, Citizen Scienceincreases publicinterest andun- - - - - www.worldcommercereview.com Macallan, Mike Peacock Walczak andEryk forcomments andcontributions. TomAnson, JamesBenford, Belsham, Rachel NidaBroughton, Botsman, Forbes, Kristin Keir Haldane, Lewis, John Clare McPhilemy,Mahon, Sam ChrisPeacock andPaul Robinsonfortheirhelpinpreparing Iwould thistext. like to thankMike to thankShivChowla, Jeremy Franklin, Fullwood, Jonathan Leanne Leahy, Gilbert, Chloe McLeay, Michael Mc- Michael The views expressed here Policy are Committee. notnecessarily thoseoftheBankEnglandorMonetary Iwould like Policy Conference, 31March 2017 givenBased onaspeech by HaldaneattheFederal Andy Francisco BankofSan Reserve Macroeconomics andMonetary and Statistics Andy ofEngland’s HaldaneistheBank Chief Economist Analysis Governor andDeputy for Monetary banks willneedto bebrave. ■ Dickens, asCharles asgreatgood astoryteller ashowman asElvis. Butto makeasuccess ofthisnewworld, central This would beabrave newworld for central banks. They donotneedto beasmagical asMandelbrot’s shaman,as needs to change. And whenbetter to changethannow. of around 11.Perhaps central bankers, likethisone, have always beenbetter at preaching so, thanpracticing. If that Worse still, itcomes inat around 11,500words, contains 2,000adverbs andhasareading andadjectives grade score isanirony,It andnotonelostonme, central that thisspeechisaclassicexample ofone-way bankcommunications. www.worldcommercereview.com 17. Stockton (2012),McKeown andPaterson (2014). Policy Committee (2013). 16. Monetary 15. Capie (2010). (2000). by described King 14. As (1986). Brunner(1981)andGoodfriend 13. See by atleastsome central banks(BIS,2009). 16 undertaken responsibilities their responsibilities. by identifiedafurther theBankofInternational Settlements Asurvey policies are seenasthefulcrumof often central andfinancialstability banks, monetary theydonot fully define 12. While 11. Claessensetal(2016),discussedinBlinder(2017). 10. The Cukierman etal(1992)index,updated andexpandedby (2016). Garriga (2016). Eichengreen andHicks(2015)Garriga (2014),Bodea forexample,9. See Cukiermanetal(1992),Grilli(1991),Crowe etal(2006),Dincer and andMeade(2007),Arnone statecraft (Acemoglu andRobinson,2012). 8. Consistent withthat,the historical evidence suggests thatinstitutions, suchascentral banks, are essentialelementsof 7. Capie etal(1994). 2017). Governor (Shafik, friendandformercolleague Shafik Deputy recently6. My Minouche mademanyspeech as points inherfinal ofthese Warsh5. See (2014)andBlinderetal(2017). HouseBill3189(2015). 4. See bank independence intheeurozone andtheUKwilldeclineover 48months” (den thenext Haanetal, 2017). macroeconomists, ofEurope-based 3. Inarecent survey only45%disagreed CFM-CEPR withthestatement that“central 2. For example, alsoCarney (2016). (2015)andEl-Erian(2015).See Sentance 1. Mandelbrot and Hudson(2004). Endnotes www.worldcommercereview.com that its text movesthat itstext financialmarkets, even after controlling fortheReport’s quantitative aspects. This suggests thatthe work36. Ongoing by Hansen,McMahonandTong usesthesetechniques to analysetheBank’s andfinds InflationReport ofthesemethods. Bholatetal (2015)forasummary 35. See Dräger etal(2016)fortheUS34. See andLamla andLein (2014) forGermany. 33. For example, van derCruijsenetal(2015). ECB president hasrecently active ingivingstatements. been made underabackdrop ofhighinflation. The reception ismorepositive whenpress conferences are informative orifthe ofECBdecisionsare more32. Berger critical etal (2011)findthatpress whenthedecisionisasurprise,reports orwhen 31. For example, Joyce etal(2010)andGürkaynak etal(2010). 30. SturmanddeHaan(2009). 29. Dräger etal(2016). 28. Carvalho and Nechio(2014). 27. EhrmannandFratzscher (2007). 26. For example, andMadeley(2010),Ranaldo andRossi(2010)Hayo Gürkaynak etal(2010). etal(2005),Hendry cation could worsen outcomes, ifitleadstheprivate to sector reduce investment in information. icy, iftheycause to coordinate expectations away from fundamentals. Kool etal(2011)show how even precise communi- 25. MorrisandShin(2002)argue thatnoisycentral bankcommunication can- pol worsen theunderstandingofmonetary by Geraats thesurvey (2002). 24. See 23. Briaultetal(1997),amongothers, make thispoint. 22. For example, Crowe (2015). (2010),Eusepi andPreston (2010)andHubert 21. For example, Blinderet al(2008),Reis(2013). 20. Drawing from onthemethodology HansenandMcMahon(2016). Williams (2016a)foradiscussionofonetheseinitiatives.19. See 18. Warsh (2014),BankofEngland(2014). www.worldcommercereview.com 56. Thompson (2016). (2017). alsoShafik 55. Reuters Institute (2016).See forJournalism 54. Pew Research Center (2016). (2016). 53. Gallup 52. Communic@tions ManagementInc(2013). (2016). 51. Botsman 50. Acemoglu andRobinson(2012). 49. For example, thework ofRachel Botsman. 48. For example, Govier (1983) andLiisberg (1997),Barber etal(2015). 47. van derCruijsenetal(2015). ofConsumers. Survey 46. Carvalho ofMichigan and Nechio(2014),usingtheUniversity Haldane(2016). 45. See andZingales(2013). 44. Sapienza inThompson43. Quoted (2016). 42. Shiller(1997). 41. YouGov (2016). 40. Elsewhere, Ihave called thiswideningtrustgaptheGreat (Haldane, Divide 2016). 39. Shiller(2017). 38. Akerlof andShiller (2009), Shiller(2017). the end, itisthegeneral publicthatgives central bankstheirdemocratic legitimacy, andhence theirindependence.” nication withthefinancialmarkets.be time It may to paysomeattention to communication withthegeneral public… In 37. For alltheresearch to date oncentral example, hasfocused bankcommu Blinderet al(2008)suggest that“Virtually - forecasts. narrative explainingwhatdrove theforecasts andhow thecommittee interprets thedatamatters, notjustthenumerical www.worldcommercereview.com 77. Williams (2014),Yellen (2017).78. Earle etal(2016). 76. Williams (2015,2016b),HaldaneandRadia (2016),Yellen (2017). 75. Meltzer (2009),Taylor (2011,2012). 74. Consumers inthetrialwere presented withhypothetical (2016)fordetails. choices. Smart See 73. For example, (2016). Halpern etal(2016). 72. Nyman 71. Federal Maker (2017). BankofAtlanta Decision Survey Reserve (Graham,American society 2017). excellent70. An recent example ofthisiscontained inCarol Graham’s of onthewell-being ofdifferent newbook cohorts 69. Jungetal(2014). 68. For example, Haldane(2016). Thaler andSunstein (2008),Adams67. See (2015). andHunt(2013)Halpern Kahneman(2011)andShiller(2017)forexamples.66. See jectives andadverbs. The adjective hasn’t builtthatcan been pullaweak orinaccurate nounoutofatightplace.” withnounsandverbs, (1979),William notwithad- write: StrunkandEBWhite “Write 65. IntheirclassicElementsofStyle (2016). 64. Smart 63. Shannon(1948). (2002,2014). 62. O’Neill (1997). Binkley 61. See etal(1993). 60. Kirsch yieldbroadly oflinguisticcomplexity metrics similarresults.puted foragiven Other text. 59. Kincaid etal (1975). The precise algorithmusedwillhave onthefinal somebearing Flesch-Kincaid score thatis com- (2004). 58. DuBay 57. The isnotlostonme. irony inalongspeech thesepoints ofmaking www.worldcommercereview.com 81. Roy etal(2012). 80. Tetlock (2016). andGardner 79. Mackay (1841).