Enhancing Central Bank Communications with Behavioural Insights

Bholat, David; Broughton, Nida; Parker, Alice; Meer, Janna Ter; Walczak, Eryk

doi:10.2139/ssrn.3233695

Cited by 6 publications

(11 citation statements)

References 17 publications

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“…This nding is consistent with Bholat et al (2018), who report that visual summaries of the Bank of England's Ination Report signicantly improve comprehension over traditional executive summaries and help align the public's economic outlook with that of the Bank of England. Moreover, public comprehension and trust can be improved by relating the summary of economic outlook and monetary policy to people's everyday experiences.…”

Section: Individual Forecastssupporting

confidence: 86%

“…argue that such new communication strategies are promising for lifting the veil of inattention of households and rms to monetary policy announcements in low-ination economies. Bholat et al (2018) nd that visualized and relatable information in the summary of the Bank of England's Ination Report improve public comprehension and trust. We provide evidence that the benets of communication emerge mainly from its ability to anchor less-informed participants' expectations.…”

Section: Résumémentioning

confidence: 99%

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Central bank communication that works: Lessons from lab experiments

Kryvtsov

Petersen

2021

Journal of Monetary Economics

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Bank of Canada staff working papers provide a forum for staff to publish work-in-progress research independently from the Bank's Governing Council. This research may support or challenge prevailing policy orthodoxy. Therefore, the views expressed in this paper are solely those of the authors and may differ from official Bank of Canada views. No responsibility for them should be attributed to the Bank.

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Section: Individual Forecastssupporting

confidence: 86%

Section: Résumémentioning

confidence: 99%

Central bank communication that works: Lessons from lab experiments

Kryvtsov

Petersen

2021

Journal of Monetary Economics

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“…Only 12% of the participants in a European wide study consider that media and politicians present various information in an easily understandable manner (Bholat et al, 2018). This is quite a low percentage, especially as 21 st century citizens are actively engaged in debates about politics, societal developments, environmental protection, social movements, terrorism and/or migration.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Haldane and McMahon (2018) found that the content published by the BoE was easily understandable and could improve citizens' outlook on the UK economy, their findings proposing directions to improve the understanding and perception of the BoE and the outlook on the UK economy, by aligning the readers' views with the bank's approach. Bholat et al (2018) measured citizens' comprehension levels of BoE publications and examined central bank communication and its effectiveness by tying it to its impact on financial markets and to the ways in which it is correlated to the inflation expectations of firms and households. Other studies show that the communication policy of the ECB reports impacts strongly financial markets and increases the interest rate of decisions' predictability (Fratzscher, 2007;Blinder et al, 2008;Konhäusner et al, 2021), thus insuring a high trust level in the content.…”

Section: Literature Reviewmentioning

confidence: 99%

Enhancing the Attractiveness and Readability of Central Bank Reports: An Experiment

Prodan¹,

Dabija²

2022

New Trends in Sustainable Business and Consumption

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Central banks can use their communication with the citizens as a tool to increase the efficiency of their monetary policy objectives. A forerunner in this sense is the Bank of England (BoE), who has already started layering its publications, by enhancing their readability, making the texts easily understandable and attractive visually, so that they can address an audience as broad as possible. Using the BoE approach, the text of one Monetary Policy Report (MPR) of the European Central Bank (ECB) has been layered in one control condition (the Monetary Policy Decision of December 2018) and four treatment groups, consisting of the same text, written in four different ways (the Objective and the Subjective Visual Summary, the Objective and the Subjective Relatable Summary). The citizens' comprehension and trust levels of every text were then tested, to find the best writing and visual text presentation technique that would enhance the efficiency of the ECB's communication strategy. In this way, the entire MPR was made more understandable for the citizens, making it more user friendly and logic, thus increasing the visibility of the organization and allowing it to be more friendly perceived. It is well known that communication and monetary policy are linked: if the recipients of a central bank message understand and trust it, they will act accordingly and thus develop a unique contribution in helping the ECB positively support the economy and the entire banking system and indirectly help it properly implement its monetary policy goals. The results of an empirical investigation conducted on the above-mentioned texts among European citizens showed that citizens tend to trust texts that are easily understandable and visually attractive and that they like objectively and simple presented information. The results of our study could be also replicated by national banks of the European Union and/or other public institutions that could benefit from enhanced trust, a better image and develop a proper binding towards citizens.

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“…"Although central banks will keep trying to communicate with the general public, for the most part, they will fail. So, the issue of improving monetary authority's communication at a time, when trust in public institutions has fallen and while the responsibilities delegated to central banks have increased, is on the agenda today" (Bholat et al, 2018). In this respect, the researchers suggest that a "Visual Summary of the inflation report improves comprehension of its main messages in a statistically significant way compared to the traditional executive summary".…”

Section: Literature Reviewmentioning

confidence: 99%

Communication as an instrument for enhancing trust in a central bank: the case of Ukraine

Shapoval

Anufriieva

Brus

et al. 2019

Banks and Bank Systems

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The relevance of trust in the central bank is determined by the rapid growth of the gap between the expectations of a regulator and market participants regardless of the reforms carried out by the NBU. Therefore, the need to use the “non-traditional” monetary policy instruments has enhanced the role of verbal interventions in the context of inflation targeting. The aim of the article is to ground that trust causes adequate rational behavior of the market participants in response to the central bank’s communication policy. The type of this research is an explanatory research method. As determined, trust is the necessary condition for the effectiveness of the central bank’s communication strategy and it favors the achievement of proclaimed objectives. It is established that although since 2014 the NBU activated verbal interventions as an additional instrument to anchor expectations, the increase of transparency does not prompt the trust because of the lack of confidence of citizens in the NBU and high level of stress in the domestic financial sector. It is emphasized that the pursuit of inflation targeting requires expanded communication to gather the expectations of economic agents. The NBU, in its communication policy concerning the economic climate, underlines devaluation expectations, the exchange rate and explanations on the discount rate. However, the deviation of expected enterprises’ exchange rate from the actual exchange rate, growing velocity of money circulation against the declining share of funds involved in the banking system, low monetization level and low penetration of financial services evidence the distrust in monetary policy.

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Enhancing Central Bank Communications with Behavioural Insights

Cited by 6 publications

References 17 publications

Central bank communication that works: Lessons from lab experiments

Central bank communication that works: Lessons from lab experiments

Enhancing the Attractiveness and Readability of Central Bank Reports: An Experiment

Communication as an instrument for enhancing trust in a central bank: the case of Ukraine

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