Notable milestones among the world’s major central banks have included: in 1994, the Fed’s decision to announce immediately its target interest rate after each meeting; the announcement of different forms of forward guidance, starting in Japan in 1999; publishing minutes of policy meetings, most recently introduced by the ECB in 2015; and forecasts for interest rates, which the Fed has done since 2012 (Table 1). The major central banks’ engagement strategies have been equally as impressive. For example, the Federal Reserve has a long-standing and extensive commitment to promote community development at the national, regional and local levels. That includes working with communities whose residents are low- and moderate-income. The various initiatives of the Community Development team at the San Francisco Fed are excellent examples of this work. 20  The Federal Reserve has also sought to learn from listening to the views of those same communities. In 2015, the Federal Reserve Board formed a new Community Advisory Council, which contains a diverse group of 15 citizen representatives. It meets with the Fed Board twice a year to provide information and recommendations on policy matters, with a focus on issues relevant to low- and moderate-income residents. Bringing this together, it is possible to construct weighted-average aggregate transparency indices. These show a steady ratchet-up in openness across a range of central banks over time (Chart 5). And if we look at mentions of the world’s major central banks in the main newspapers, these have also been on a steadily-rising trend over time (Charts 6A and 6B).

Some elements of the general bankruptcy procedure, such as freezing balance sheets, may in some cases be directly harmful if applied to a systemically-important institution. For example, the banks’ central role in the payment system means that one cannot merely stop payments in one or more of the major banks, as this could have devastating consequences for the financial system. During the bank crisis no banks were declared bankrupt. The lack of specially-adapted regulations for winding up problem institutions with the capacity to take into account society’s need for financial stability was emphasised by the Banking Law Committee. This was a commission of enquiry appointed in 1995 in the wake of the bank crisis to look into the needs for modernised legislation for banks. The Committee also presented a proposal for a new system to manage banks in distress, called public administration. This proposal has now been under investigation, as it is called, by the Government Offices since the year 2000. Custodia was a reminder of the shortcomings Since then we have received new indications of the shortcomings in the regulations. The course of events at credit institution Custodia in 2006 indicated worrying difficulties in managing even a relatively small and insignificant problem institution. We are therefore in no way better equipped than the United Kingdom to manage problem institutions and this applies with regard to both small and large institutions. Fortunately, Custodia was a small company and the problems occurred in a situation where there was relative calm on the financial markets.