Central banking with many voices: the communications arms race

Abstract

Around the world, most central banks set policy by committee. This is motivated in part by the idea that groups reach better decisions than individuals and in part by a desire for representation of different geographical areas and economic constituencies in policymaking. The Bank for International Settlements (2009) documents that across central banks, the median number of members on monetary policy boards is eight. The Federal Reserve and the European Central Bank (ECB) have substantially more decision-makers than the median, with 19 members of the Federal Open Market Committee (FOMC) (of which 12 vote at any given time) and 25 members of the ECB’s Governing Council (of which 21 vote at any given time).