Central banks must improve communication to regain public trust, the BoE's chief economist Andy Haldane says

 
Courtney Goldsmith
Follow Courtney
Bank Of England Cut Interest Rates To All Time Low
Banking institutions need to practice, not preach, Haldane said (Source: Getty)

Central banks need to improve how and with whom they communicate in order to regain public trust.

Many don't understand the role of institutions like the US Federal Reserve or the Bank of England (BoE) despite their role in keeping global economies afloat during times of crisis, BoE chief economist Andy Haldane said in a speech at the Federal Reserve Bank of San Francisco last night.

Haldane said:

Trust is the lifeblood of all things monetary and financial, including central banks.

And incredulity is Kryptonite for central banking Supermen (and the odd Superwoman), rendering ineffective their policies and unaccountable their actions.

Building trust and legitimacy is among the most pressing issues facing central banks today.

Read more: BoE chief economist on Brexit: Won't someone think of financial services?

The way trust is built has been "fundamentally reconfigured", Haldane said.

"Where once trust was anonymised, institutionalised and centralised, today it is increasingly personalised, socialised and distributed."

Haldane suggested using simpler language and new technologies like gaming and social media, to understand views of groups which are currently out of reach, like younger people.

"Central banks are public institutions, put on earth to serve the public. As the public’s norms, preferences and demands shift, so too must central bank practices," he said.

Read more: Emergency rate cut saved 1.5m jobs, says BoE economist

Related articles