The RBI has come in for effusive praise by the global banking authority, the Bank for International Settlements (BIS), for its effective communications strategy.
The RBI has been applauded by the BIS, which calls itself ‘a bank for central banks’, for effectively using a targeted communication strategy for reaching out to the right audience in “short and simplified” language.
In its latest annual economic report, Basel-based BIS, which is owned by 60 central banks from across the world including the Reserve Bank of India, has said that effective communication is critical for success, as in many other policymaking areas.
“Communication can explain the objectives, strategy and policy process to the public, and thus build political support. In addition, it can help the authorities share their risk assessment with both the affected parties and the broader public, which can enhance effectiveness,” the BIS said.
Stating that the message needs to be delivered effectively to the right audience for communication to achieve the desired effects, the BIS said it is the primary audience that largely determines the content, sophistication and channels used.
Most central banks communicate financial stability risks in speeches, press conferences and their regular financial stability reviews.
The BIS said such reviews are useful in communicating with specialists, but they can easily prove opaque for the broader public and therefore several central banking authorities also use more targeted channels.
“For instance, the Reserve Bank of India issues short and simplified press releases for an audience with limited financial literacy. Establishing links with the media, such as through background briefings, is another common tool,” the BIS said.
It further said that communication might even be viewed as a macroprudential tool in its own right and central bank warnings, in theory, might head off adverse developments, obviating the need for any subsequent remedial action.
In practice, however, examples of warnings that appear to have taken effect without subsequent concrete actions (or at least the threat thereof) are rather few, the BIS said.
Established in 1930, the BIS says its mission is to serve central banks in their pursuit of monetary and financial stability, to foster international cooperation in those areas and to act as a bank for central banks.
Its board of directors include RBI Governor Urjit Patel.
The RBI chief is also member of the FSI Advisory Board, which is mandated to provide strategic advice to the Financial Stability Institute (FSI), jointly created in 1998 by the BIS and the Basel Committee on Banking Supervision.