The public perceptions start to be influenced by local fake-news campaigns echoing the ‘post-truth era’ that pointed to the Romanian central bank as being ‘the banks’ lawyer’, National Bank of Romania (BNR) governor Mugur Isarescu said in Istanbul.
According to the governor, as the global financial crisis unfolded, it took a while until the loss of confidence in the main actors of the financial industry filtered in to also affect the National Bank of Romania.
“Thus, a few years ago, the public perceptions started to be influenced by local fake-news campaigns echoing the ‘post-truth era’ that pointed to the NBR as being ‘the banks’ lawyer’,” he said.
Moreover, as loose or uneven fiscal moves or reckless legislative initiatives hindered the efficiency of the overall macroeconomic policy mix in Romania, the central bank openly voiced its concerns regarding the sustainability and impact on growth potential of such populist measures, triggering harsh criticism from their promoters, according to the governor.
The global crisis proved once again that price stability cannot be achieved in the context of financial instability, whose resolution calls for far more than monetary policy words and deeds and by far more knowledge and confidence.
“A reputation that had been earned thanks to a more transparent, flexible, effective policy and to a greater openness to the general public. We were not alone. That sentiment became mainstream across the globe, as well,” Isarescu points out.
Central bankers are nowadays cornered to deliver more in their countries, to actively punish the offenders of fiduciary and prove more empathic with debtors and, why not, more compliant and tolerant with populist measures that affect the financial sector and macroeconomic stability, according to the BNR governor.
“Given the rapid change in perceptions in a ‘post-truth’ environment, with few impartial media and the increase in populism, most central banks across the world, including the National Bank of Romania, may face a possible delay in recovering the public trust to the pre-crisis levels,” Isarescu indicates.
“Even if they spoke more plainly or loudly, using all the modern communication toolkits, the slow bridging of the trust gap should not crush the contribution of independent central banks to the efforts to avert crises, achieve economic progress and be an open and responsible institution in the society,” he added.
The governor considers that the markets and the public at large need to be convinced by central banks through consistent and effective words and policy actions, formulated as plainly as possible, in order to build knowledge and confidence – all vital for an effective management of public expectations.
“A careful calibration of wording is needed, along with greater efforts to explain the role and limits of central banks in the financial field, in order to secure confidence. All this becomes even more challenging given the fast-moving, ‘post-truth’ environment plagued by populism. As impatience has filtered in many domains, an erosion of confidence in the independent, accountable public institutions has emerged, as did the risk of exposure to swings in the economy, due to a change in sentiment,” Isarescu underlined.