Linguistics in Central Banking
Communication is a tool that helps central banks preserve price stability. However, are central banks clear enough and properly understood? According to Gabriel Glöckler and Simon Mee, whatever central banks say can have a powerful impact on people’s wealth and welfare. Despite this strong effect on people’s lives, central banks — like banking supervisors and other expert institutions — struggle to communicate in plain language (13 October 2022).
The inception of the economics of language as an academic discipline is commonly attributed to the influential economist Marschak (1965), whose profound proficiency in ten languages likely stimulated his interest in linguistic studies. Marschak notably pioneered the integration of cost-benefit analysis into the realm of linguistic analysis. While early contributions by researchers such as Pool (1972), Breton (1978), McManus et al. (1983), and Grenier (1984) are acknowledged, the profound impact of language on social, political, and economic outcomes primarily lay within the domain of linguists, sociolinguists, political scientists, anthropologists, and psychologists.
Focusing on such specific audiences creates problems. If a central bank relies on complex language, only an audience with many years of specialised education can understand it. Central bank jargon excludes many people, notably those who struggle with concepts like ‘monetary policy transmission’, but who would gladly discuss common sense topics like ‘price rises’ (Glöckler, G. and Mee, S., 2022).
On the Central Banking website, it’s revealed that the majority of central banks employ multilingual communication. However, this presents a challenge for these financial institutions as they strive to translate important messages while ensuring effective communication with their internal staff. In a tweet on July 16, 2021, they shared insights from the Communications Benchmarks 2021 report, indicating that 23 out of 34 central banks (68%) communicate in two languages. Seven central banks (21%) use a single language, and four banks (12%) operate in three languages. It’s important to note that the percentages may not sum to exactly 100 due to rounding (Central Banking staff, 16 Jul 2021, accessible at https://www.centralbanking.com/benchmarking/communications/7853511/most-central-banks-communicate-in-at-least-two-languages).
In summary, the text highlights the crucial role of communication for central banks in maintaining price stability and underscores the challenge they face in effectively conveying information in clear and accessible language, as emphasized by Gabriel Glöckler and Simon Mee (13 October 2022).
The inception of the economics of language as an academic discipline, often attributed to Marschak (1965), marked a pivotal moment in recognizing the importance of language within economic analysis. As demonstrated by early contributions and contemporary research, the language used by institutions like central banks holds immense power, shaping social, political, and economic outcomes.
However, the complex language often employed by central banks raises a significant concern — a disconnect between the institution and a broader audience. Central banks, as crucial entities in the economic realm, must bridge this gap by adopting clear and accessible communication strategies. The statistics provided from the Central Banking webpage underscore the necessity for multilingual communication, emphasizing the need for central banks to prioritize effective translation and accessibility in their communication efforts, ensuring they connect with a diverse audience and effectively convey their messages to the public. Language should be wielded as a tool for inclusivity and understanding, rather than a barrier to comprehension, particularly in domains as critical as monetary policy and economic stability.
P.S.: It’s essential to recognize the nuanced differences between “Linguistics in Central Banking” and “Linguistics in Central Banks” when considering the scope of our study. “Linguistics in Central Banking” implies a focused examination of linguistics within a specific central banking institution, delving into its communication policies and strategies. Conversely, it is interesting to note that several studies and references also explore “Linguistics in Central Banks.” This broader term encompasses a comparative analysis of linguistics across multiple central banks, providing a more comprehensive view of linguistic applications and policies within the central banking sector. Selecting the appropriate term sets the stage for a focused or expansive exploration of the subject matter.
References
Breton, A. (1978), “Bilingualism: An economic approach.”
Gabriel Glöckler and Simon Mee, (2022), “A plain-speaking central bank: contradiction in terms?,” THE ECB BLOG, (13 October).
Grenier, G. (1984), “The effects of language characteristics on
the wages of hispanic-american males,” Journal of Human
Resources, pages 35–52.
Marschak, J. (1965), “Economics of language,” Systems Research
and Behavioral Science, 10(2):135–140.
McManus, W., Gould, W., and Welch, F. (1983), “Earnings of
hispanic men: The role of english language proficiency,”
Journal of Labor Economics, 1(2):101–130.
Pool, J. (1972), “National development and language diversity.
In Advances in the Sociology of Language,” Volume 2: Selected
Studies and Applications, pages 213–230, Mouton.
