Central banking is becoming increasingly complex and difficult to understand, supporting the case for new ways to communicate, European Central Bank board member Benoit Coeure said.
“Based on common measures of text readability, the introductory statement delivered at our last ECB press conference was only accessible to university graduates, who constitute only around a third of the euro area population,” Coeure told a conference. “That cannot be good news.”
Speaking at conference to mark the Swedish central bank’s 350th birthday, Coeure said that in the post-crisis world of unconventional policy, inflation may react more slowly to central bank policy, creating a disconnect between policy action and its outcome.
“Output legitimacy may be more difficult to assert if inflation is proving to be less reactive to central bank actions in the short term,” he added.
To overcome this challenge, Coeure called on banks to improve transparency, embrace Twitter and layer their communication to target different segments of society.
But he added that central banks had their limits given the complexity of their jobs and the “worryingly low level” of financial literacy among adults in the developed world.