Making monetary markets transparent: the European Central Bank's communication policy and its interactions with the media

Abstract

In the 1990s central banking in Europe and the United States witnessed a paradigm change. A central tenet of the new paradigm was that a central bank which acts in a transparent and predictable manner reduces uncertainty for economic actors and will be better able to control inflationary expectations. Thus, central bankers set out to enhance their institution's transparency. In this paper, I argue that transparency is not limited to the release of economic data or information about decision-making procedures. It entails producing a new type of market order and results in a new agencement. This paper focuses on the European Central Bank (ECB) and on one actor it relies on: the media. Based on ethnographic data, I analyse the role of the media in the production of a transparent market order. I find that prevailing new rules, new frames and reward systems preclude journalists from playing the role the ECB would like them to play: the instrumental role of a neutral transmitter of information. The struggle between the two actors is a struggle with words, in which both journalists and central bankers want to manipulate markets with their communicative utterances, albeit in different and frequently opposing ways.

Keywords:

• European Central Bank
• social studies of finance
• media sociology
• performativity
• journalism
• transparency

Acknowledgements

Thanks to PW Zuidhof, three anonymous reviewers and participants in the ‘Reembedding Finance’ workshop (Paris, 2010) for insightful comments and suggestions for improvement.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 Definitions of transparency provided in the monetary economics literature usually include one or more of the following: how well does a central bank explain its objectives, its monetary strategy, the way it comes to its policy decisions, the assumptions it makes in this decision-making process, the quality (e.g. precision) and quantity of the data it publishes? Eijffinger and Geraats, for instance, define transparency of monetary policy as ‘the extent to which central banks disclose information that is related to the policymaking process’ (Eijffinger & Geraats, 2006, p. 3), while Blinder et al. refer to a definition in terms of ‘how easily the public can deduce central bank goals and intentions from observable data’ (Blinder et al., 2008, p. 419).

2 In 2013, the eurozone's share of the world economy was 12.1 per cent, as against that of the United States which was 16.5 per cent. See http://www.ecb.int/mopo/eaec/html/index.en.html, last accessed in March 2015.

3 For an economic approach to the same topic, see Dincer and Eichengreen (2009); from a political economy point of view, Quaglia (2005) has studied international pressures on national central banks to become more independent.

4 In explaining this performative effect, two aspects of media reporting should be distinguished: on the one hand, the more the media report on inflation, the closer the public's expectations are to the professional forecasts. On the other hand, the way inflation is framed in the media has influence in itself. A media bias in which the dangers of inflation are exaggerated may constitute a self-fulfilling prophecy (Lamla & Lein, 2008, p. 4).

5 In the monthly bulletin, the ECB ‘provides the general public and the financial markets with a detailed and comprehensive economic analysis’. See the bank's communication strategy, available at http://www.ecb.int/mopo/strategy/comm/html/index.en.html, last accessed in July 2010.

6 At the press conference, the bank's president reads an introductory statement which is supposed to provide a summary of the Council meeting. This statement also explains the Council's monetary policy. The statement is followed by a question-and-answer session with financial journalists. In January 2015, the ECB started publishing the minutes of the Council meetings as well.

7 Travel costs to and from these seminars are covered by the ECB.

8 ‘A few remarks on communication by central banks’, Keynote address by Jean-Claude Trichet, President of the ECB at the 25th HORIZONT Award Ceremony Frankfurt am Main, 16 January 2008. Available at http://www.ecb.int/press/key/date/2008/html/sp080116_1.en.html, last accessed in November 2010.

9 This evening report is distributed to the entire economy section the next day.

10 The names of journalists have been anonymized. In the transcripts of the field-notes, ED1 refers to first editor-in-chief of the business section while the author was working there, ED2 refers to the second editor-in-chief who started in 2007 when ED1 got another position at the newspaper; RA refers to myself, OR refers other reporters in the business section.

11 This effect of news frames is in other words analogous to a lack of category fit, discussed in neo-institutional sociology (see e.g. Zuckerman, 1999).

Additional information

Notes on contributors

Olav Velthuis

Olav Velthuis is Associate Professor in the Department of Sociology and Anthropology at the University of Amsterdam. He is the author of Imaginary economics (NAi Publishers, 2005) and Talking prices: Symbolic meanings of prices on the market for contemporary art (Princeton University Press, 2005), which received an award from the American Sociological Association for the best book in economic sociology (2006). Velthuis studied Economics and Art History at the University of Amsterdam and has a PhD in Sociology from Erasmus University, Rotterdam. For four years, he worked as a staff reporter for the Dutch daily newspaper de Volkskrant. He is currently studying the emergence of markets for contemporary art in Brazil, Russia, India and China.