Reserve Bank committed to effective communication
"We are working to enhance the openness and effectiveness of our communications," Mr Bascand said in a speech to the Admirals' Breakfast Club in Auckland.
Central banks' communication strategies and their ability to communicate effectively have been challenged enormously by the events and consequences of the Global Financial Crisis, the introduction of macro-prudential policy, the emergence of new technology and social media, and in New Zealand's case by expanded regulatory responsibilities for insurance and the non-bank deposit-taking sector.
"Complexity has increased, audiences have expanded, and the immediacy and saturation of news coverage has turned the volume control on full," Mr Bascand observed.
The Reserve Bank has adapted its communications to recognise significant interest shown in the Bank's policy settings, policy objectives, tools, and governance.
In addition to usual press conferences and Select Committee briefings following Monetary Policy Statements and Financial Stability Reports, the Bank has expanded its on-the-record speaking, is expanding its business sector engagement, refreshed its website, and is communicating more via social media, including producing videos that explain its policies. In addition, the Bank will commission a regular stakeholder survey that will help us understand the clarity and reach of our communications through various channels.
Mr Bascand said the Bank communicates in order to promote understanding and to demonstrate accountability, supported by transparency. It also uses communication as a monetary policy tool.
"Our communications support monetary policy by informing and shaping expectations about future monetary policy settings. Widespread understanding of the Reserve Bank's policy approach makes it easier for the Bank to achieve its objectives, for example in achieving price stability, by better anchoring low inflation expectations. This, in turn, means that we are able to respond to economic shocks by adjusting interest rates less than would otherwise be the case," he said.
A recent study reported that the Reserve Bank of New Zealand is the second most transparent central bank in the world, just behind the Swedish central bank.
"As a financial regulator, accountability is a key reason for transparency around our regulatory conduct, with public engagement a cornerstone of our approach to prudential policy development. Transparency also gives economic benefits from enhancing the operation of financial markets and improving the public's understanding of financial risk.
"A key message here is that the Reserve Bank's regulatory and supervisory oversight does not represent a ‘no failure' regime. Accordingly, investors need to carefully assess risk against expected returns. The Bank's increased regulatory and supervisory responsibilities will demand new communication channels, new audiences and new messages," Mr Bascand said.
Mike Hannah, Head of Communications
Phone (04) 471 3671 or 021 497 418 [email protected]