Broader Audience Transparency Index for Central Banks

Transparency is one of the key quantitative indicators of the quality of central bank communication. The more information a central bank releases about its policy, the more transparent its communication is considered to be. Globally, there are several popular indices to assess the transparency of communication. However, all of them fail to assess the transparency of central banks for the population. This paper is set to fill in this gap, which is especially important given the pivot of monetary authorities towards expanding communication with the general public. The BATI (Broader Audience Transparency Index) assesses 20 central banks in developed and developing countries in terms of the key functions of their public communication (information, education, accountability, and signalling). In total, the index has 40 criteria, of which three are punitive. They downgrade central bank assessments for redundant style, bureaucratic syntax, and contradictory signals, which may endanger dialogue with the public. When drafting the BATI criteria we incorporated the results of other researchers across various areas, i.e. monetary policy, government information policy in a general sense, marketing, brand management, and cognitive psychology. The BATI is based on indicators the value of which has been established in empirical studies or thoroughly founded in theoretical academic papers. When evaluating the index criteria, we employed both the standard method of expert assessment of communication with the help of lists (traditionally used to create transparency indices) and NLP and LLM methods for handling non-structured data. Specifically, 23 out of the 40 criteria of the index were defined using expert assessment, four – LLM models, and 13 – machine text analysis. The Bank of Canada, the Bank of England and the European Central Bank received the highest BATI scores among central banks for communication with the general public. The Bank of Russia is ranked fourth with 17.31 points out of 37. It belongs to the group of central banks that use advanced practices in communication with the public but have certain gaps in some communication functions. At the same time, the Bank of Russia has the highest score in audience education (tied with the US Federal Reserve System and the Reserve Bank of Australia). In general, the BATI index value is significantly higher in developed economies than in developing countries. This is consistent with the findings of studies on central bank transparency for professional audiences. The Bank of Russia is an exception among developing countries. It is closer to central banks in developed economies on almost all criteria of transparency for broader audience. The main academic novelty of this paper is the attempt to bridge the gap in terms of the absent instrument for assessing central bank efforts to enhance transparency for the general public. Our proposed BATI index assesses the extent of central bank efforts within each of the main communication functions and can help monetary authorities choose the options how to further develop their information policies. Moreover, our newly created instruments for automated handling of non-structured data also make a contribution to the literature.