For over 300 years the Bank of England has been the strong, silent type. At a party the Bank would be the person listening soberly to the music, head down, contemplatively tapping a foot. On the rare occasion they had something to say, the music would silence and people would listen.
Enter Mark Carney, the former Canadian Central Banker, and contrasting figure to the previous Governor, Mervyn King. Under Carney’s leadership the Bank has taken a more progressive and transparent approach to its communications and public profile. We’ve written before about the pros and cons of forward guidance. Now, in the new era of transparency, the Old Lady of Threadneedle Street has started a blog.
The launch of Bank Underground has been largely greeted as a positive step and follows the introduction of the Federal Reserve’s blog, Liberty Street Economics. However, much like the Bank’s approach to forward guidance, I wonder if there is a similar pitfall: interpretation. Of course, all efforts to reach out and communicate with the world contain an element of risk. Bank Underground, like many company blog sites, points out that the views expressed are not house views. The issue here is divorcing the two. Where does the blogger’s view stop and the Bank’s start?
Writing a blog on financial stability (one of Bank Underground’s categories) will invite attention. Interested parties will pick over it for some sort of interpretation of the Bank’s intentions. They will use it to assess the mood of the Bank. After all, it will have been written by people on the inside – they know what’s going on. That’s exactly the type of content we’ll want from a BoE blog, but can we use it to inform a view of what the Bank thinks? The danger is that blogs fall between two stools: neither the formal Bank line nor challenging or informative enough to be the sort of insight and perspective we would expect from such an institution.
I don’t need a blog to show me how smart and informed the people at the Bank of England are. I would expect nothing less. I also don’t want a flow of consciousness on all sorts of finance related topics from the Bank, as there is already abundance. A central bank’s value as a communicator is that when it has something to say it carries weight; the music will go quiet, and I will listen.