Talking in a language that everyone can understand? Transparency of speeches by the ECB Executive Board

Glas, Aarie; Ls, Müller

doi:10.2139/ssrn.3790506

Cited by 5 publications

(5 citation statements)

References 34 publications

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“…Most of the time, their readability was at the third level and dropped lower during the 2014-2015 crisis, the volatility in the financial markets in the first half of 2018, the VAT hikes in early 2019, and the pandemic in 2020. Glas and Müller (2021) found similar results when assessing the readability of statements by members of the Executive Board of the European Central Bank.…”

Section: Assessment Of the Readability Of Bank Of Russia Monetary Policy Communication And Recommendationssupporting

confidence: 56%

Assessment of the Clarity of Bank of Russia Monetary Policy Communication by Neural Network Approach

Evstigneeva¹,

Sidorovskiy²

2021

RJMF

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Inflation targeting requires clear and transparent central bank’s communication. Analysts and market participants understand it as a broad list of information disclosed by the central bank. The general public understands it rather as the ability of a central bank to speak and explain its decisions in a plain language. In recent decades, monetary authorities in many countries have made significant progress in this direction. However, there has been no research on the quality of communication for the Bank of Russia. This paper aims to create a tool for automated evaluation of the readability of the Bank of Russia’s monetary policy communication, taking into account the available experience of linguistic and textual analysis, including machine learning methods, as well as to provide recommendations for its improvement. This can contribute to improving the effectiveness of the Bank of Russia communication on monetary policy, which is vital for its credibility, anchoring inflation expectations, and predictability of the regulator’s decisions.

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Section: Assessment Of the Readability Of Bank Of Russia Monetary Policy Communication And Recommendationssupporting

confidence: 56%

Assessment of the Clarity of Bank of Russia Monetary Policy Communication by Neural Network Approach

Evstigneeva¹,

Sidorovskiy²

2021

RJMF

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“…Furthermore, monetary policy communication needs to adapt to evolving trends in digital communication channels and be able to rapidly respond to unexpected shocks like COVID-19 and heightened uncertainty (see Ehrmann et al, 2021). As indicated by Glas and M€ uller (2021), communicating clearly becomes more difficult during crisis when monetary policy tends to become increasingly more discretionary and complex. However, it is precisely these times when the general public is looking for guidance and leadership.…”

Section: Discussionmentioning

confidence: 99%

“…, 2021). As indicated by Glas and Müller (2021), communicating clearly becomes more difficult during crisis when monetary policy tends to become increasingly more discretionary and complex. However, it is precisely these times when the general public is looking for guidance and leadership.…”

Section: Discussionmentioning

confidence: 99%

Communicating financial stability in monetary policy reports: a text-mining experiment in postcommunist countries

Kurowski,

Smaga

2023

CEMJ

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PurposeFinancial stability has become a focal point for central banks since the global financial crisis. However, the optimal mix between monetary and financial stability policies remains unclear. In this study, the “soft” approach to such policy mix was tested – how often monetary policy (in inflation reports) analyses financial stability issues. This paper aims to discuss the aforementioned objective.Design/methodology/approachA total of 648 inflation reports published by 11 central banks from post-communist countries in 1998-2019 were reviewed using a text-mining method.FindingsResults show that financial stability topics (mainly cyclical aspects of systemic risk) on average account for only 2%of inflation reports’ content. Although this share has grown somewhat since the global financial crisis (in CZ, HU and PL), it still remains at a low level. Thus, not enough evidence was found on the use of a “soft” policy mix in post-communist countries.Practical implicationsGiven the strong interactions between price and financial stability, this paper emphasizes the need to increase the attention of monetary policymakers to financial stability issues.Originality/valueThe study combines two research areas, i.e. monetary policy and modern text mining techniques on a sample of post-communist countries, something which to the best of the authors’ knowledge has not been sufficiently explored in the literature before.

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“…Nevertheless, the opaqueness of speeches has remained high in recent years, requiring nearly 14 years of education for comprehension. Early in 2020, readability declined, undoing the achievements made in Lagarde's first several months in office (Glas and Müller 2021;Lazarevic et al 2022). Several euro area studies (Calvo et al 2013;Haldane and McMahon 2018;Prodan and Dabija 2022) highlight the fact that regular citizens who do not have higher education degrees have difficulties in comprehending essential publications such as the inflation reports outlining the Bank's monetary policy directions.…”

Section: Development Of Central Bank Communicationmentioning

confidence: 99%

Adapting the Digital Servuction Model to Central Banks: Case Study: European Central Bank

Prodan,

Dabija

2023

Administrative Sciences

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Central bank communication has changed over the years, following the trend of digitalization. It has been used as a tool for the implementation of monetary policies since the 1990s, when central banks started publishing their inflation reports, outlooks, and meeting minutes on the road towards greater transparency, and to help meet their price stability mandate. This mandate cannot be achieved through traditional financial instruments alone, so digital communication and marketing has become an economic policy tool. The effectiveness of the European Central Bank’s online communication tools will be tested via a GAP model, by applying an adapted version of the servuction scale to the Bank and disseminating it to 500 citizens, with the purpose of measuring citizen satisfaction with its website and communications. The servuction model focuses on high quality services that are perceived as such by private sector customers, having a strong marketing component. The originality of the research consists in adapting it to the public sector, more specifically to central banks, and by treating citizens as customers throughout the study. The model was successfully applied to the European Central Bank, demonstrating that citizens’ expectations are highest regarding both the reliability and assurance dimensions, meaning that they want to feel confident in ECB actions, and to the understandability dimension of its online content. The largest gaps between citizens’ expectations and perceptions were identified within the efficiency, understandability, and empathy dimensions. In future, the study can be replicated and adapted to both national central banks and private banks within the European Union, assessing how citizens perceive their websites, communication, and marketing strategies, with the purpose of improving the latter two, and increasing civic engagement. The model can also be adapted to narrower topics relating to sustainable digital development, such as the expectations and perceptions of citizens with regards to central bank digital currencies.

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Talking in a language that everyone can understand? Transparency of speeches by the ECB Executive Board

Cited by 5 publications

References 34 publications

Assessment of the Clarity of Bank of Russia Monetary Policy Communication by Neural Network Approach

Assessment of the Clarity of Bank of Russia Monetary Policy Communication by Neural Network Approach

Communicating financial stability in monetary policy reports: a text-mining experiment in postcommunist countries

Adapting the Digital Servuction Model to Central Banks: Case Study: European Central Bank

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