To Talk or Not to Talk? Reflections on Central Bank Communication in Times of Crises

Download or read book To Talk or Not to Talk? Reflections on Central Bank Communication in Times of Crises written by Anton Comanescu and published by . This book was released on 2009 with total page 13 pages. Available in PDF, EPUB and Kindle. Book excerpt: During the last decade, central bank communication and transparency became undisputable conditions of an effective monetary policy. Central banks around the world seek to consolidate their credibility by communicating effectively their policy goals to the financial markets and the public at large. Nevertheless, transparency has its challenges, particularly in times of financial turmoil when markets can misinterpret central bank messages. The way central banks manage to maintain credibility through effective communication both in normal and exceptional situations remains part of the art of monetary policy. Important challenges are posed to communication, in the context of conflicting pressures towards disclosure versus secrecy. The mantra of transparency still has its ayatollahs but some precepts have to be reconciled with the risks of misguiding the markets. Crowding out of private information, potential fueling of banking panics and moral hazard are few of the problems that could threaten the performance of a central bank in communicating to its various audience.