The Bank of Canada has released Staff Discussion Paper 2023-2, by Monica Jain, Walter Muiruri, Jonathan Witmer, Sharon Kozicki & Jeremy Harrison titled Summaries of Central Bank Policy Deliberations: A Canadian Context:
This paper provides the context, rationale and key considerations that informed the Bank of Canada’s decision to publish a summary of monetary policy deliberations. It includes an analysis of how other central banks disclose minutes and summaries of their monetary policy deliberations.
Most other central banks surveyed publish some sort of summary of deliberations. The Bank of Canada’s existing communications already include aspects of these summaries. However, the Bank does not normally provide some information that they contain, such as:
- • a review of the policy choices that were discussed
- • a diversity of viewpoints on the economic outlook and policy choices
- • the perspectives of individual members
Publishing a summary of deliberations could enhance transparency, accountability and credibility and also reinforce the Bank’s independence. However, these benefits must be balanced against the potential for constraints on internal debate or the sending of mixed messages about the Bank’s outlook and decisions. The Bank of Canada Act empowers the Governor to make decisions, but in practice, decisions are made by consensus among members of the Bank’s Governing Council. This decision-making by consensus could have implications for what could or should be included in a summary.
In the Canadian context, assuming the Bank will provide additional information, we also discuss some advantages and disadvantages of providing a summary of deliberations as a separate communication product or as an enhancement to current communications products.
The material in the paper originally served as background information for internal discussions at the Bank of Canada around publishing a summary of policy deliberations. Following those discussions, the International Monetary Fund (IMF) published a review of the Bank of Canada’s transparency, concluding that the Bank “… sets a high benchmark for transparency” (IMF 2022). In that review, the IMF provided a recommendation on how the Bank could further improve its transparency by providing more information on its monetary policy deliberations. In response to the IMF review and internal discussions at the Bank, the Bank has publicly committed to providing a summary of its policy deliberations beginning in February 2023.
The most desperately needed disclosure is – as Assiduous Readers will be sick to death of me complaining – voting records. So here’s a table comprised of their summaries of voting records:
| Country | Policy |
| Canada | The BoC follows a consensus-based decision-making approach so does not disclose voting records. |
| New Zealand | The RBNZ follows a consensus-based decision-making process so does not disclose voting records. |
| Australia | The RBA follows a consensus-based decision-making approach so does not disclose voting records. |
| Norway | Norges Bank follows a consensus-based decision-making approach so does not disclose voting records. |
| United States of America | The Fed lists all the members (by name) who voted for and against the proposed policy at the meeting. |
| England | The BoE lists all the members (by name) who voted for and against the proposed policy at the meeting. |
| Sweden | In the opening few sentences of their monologue, each Committee member states whether they voted for or against the proposed policy at the meeting. |
| Europe | Although the ECB follows a voting-based decision-making approach, it does not disclose the voting records. |
| Japan | The BoJ lists all the members (by name) who voted for and against the proposed policy at the meeting. |
Consensus is for second-raters and time-servers. A confident, intelligent person will not feel any shame about being in the minority, even if on a repeated basis. Hell, Leon Trotsky was a proud member of the Menshevik (minority) Party and he got a lot of respect in his day! I take issue with the following quotation from the abstract:
However, these benefits must be balanced against the potential for constraints on internal debate or the sending of mixed messages about the Bank’s outlook and decisions.
Dammit, I want mixed messages! Only idiots will take the view that monetary policy is a puzzle with only one answer – it’s complex and is concerned exclusively of forecasts about the future that are, we hope, backed up by excellent data and analysis of current conditions. While the consensus phrase ‘risks to the forecast include…’ may attempt to give a sense of the uncertainty, it is nowhere near as useful as ‘so-and-so was so concerned about the potential for X that he voted against the policy decision! He put his name on it! He stepped up and advocated an unpopular position for no other reason than he thought it was right! Pay attention, people!’
I will also take issue with the other justification put forward, that increased transparency (such as publicizing voting records) will constrain internal debate. OK, I say, relative to what? People will feel constrained from vigorously asserting their views for all sorts of stupid reasons and I will suggest that the necessity for eventual consensus is a greater constraint that the publication of a dissenting vote with a brief note of explanation. Arse-kissers and group-thinkers thrive in an environment in which they are explicitly expected to agree with the loudest voice in the meeting, and we don’t want any of them setting monetary policy!
Other data compared in the tables are disclosures of:
- Discussion of risks
- Data and projections
- Financial developments
- Economic developments
- Areas of discussion in deliberations specified
- Detail of meeting transcript/summary
- Diversity of views
- Indications of future policy interest rate decisions
- Indications of future non-interest-rate policy decisions
- Publishes a monetary policy report
- Discusses conflicts in policy decisions