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.
