BoE's Haldane calls for second revolution in central bank's communications

Bank chief economist Andrew Haldane laid out the case on Wednesday for a second revolution in how the Bank of England interacts and communicates with the British public.

Speaking on occasion of the central bank of Estonia's 100th anniversary, Haldane criticised the opacity that had characterised previous generations of central bankers - possibly due to political constraints - and the economic costs with which that had saddled the economy.

Progress had been made in the recent past in addressing those shortcomings.

Nevertheless, there remained a deficit of understanding and trust in central banks and other public bodies, and in the BoE more specifically, he said.

To address that, he called for a second revolution in how the BoE communicates its actions and in the public's role in helping policymakers take better decisions.

Indeed, that is why earlier in 2018 Bank began setting-up a set of Citizens' panels in the UK, with plans to roll them out across Britain in 2019.

"The failure to boost understanding of the economy and central banks among the general public helps explain why trust in central banks proved more fragile than expected after the crisis. It is for these reasons I have spoken about central banks facing a 'twin deficits' problem – a deficit of public understanding and a deficit of public trust," Haldane said.

"In response to greater levels of responsibility, but more fragile trust, I will argue a second revolution in central bank practices may be needed. This would need to be every bit as radical as the first, but would require central banks to engage with, and draw on, the general public – their “folk wisdom” – as never before."