BoE’s Haldane says central banks must rely on “folk wisdom” to build public trust

Folk Wisdom
Andrew G Haldane
Chief Economist
Bank of England

100th Anniversary of the Bank of Estonia Tallinn, Estonia
19 September 2018

Central banks, like all public institutions, were created by the public to serve the public. Despite a communications revolution, public understanding of central banks remains low and public trust in central banks has fallen. Improving both calls for a second revolution, focussed on educating and learning from the general public. The Age of Innocence may be over, but the Era of Engagement has only just begun.

This new era may mean 21st century central banks becoming more disbursed and personalised in their communications, creating new infrastructure to interact with the public and extract their folk wisdom. Thomas Jefferson said democracy is something you can only learn by doing. The same is true of central banking. For the Bank of Estonia entering its second century, and for the Bank of England in its fourth, there is much still to learn and even more to do.

Editor’s Note: deeply insightful comments from Haldane about how central banks used to operate and how they must proceed to communicate their messages and utilize crowd-sourced information from the public.

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