Many government agencies have valuable information that private citizens cannot easily  13  See Plous (1993). 14  Tucker (2009) discusses how this might create a friction that could be countered through the use of so-called macroprudential instruments. 6  BIS Review 36/2010  obtain for themselves. An example is the information collected by the Office for National Statistics on the economy and social trends. Central banks, too, may have information about the shocks hitting the economy, or about how they will be propagated, or indeed about the way in which policy is likely to respond. Provision of information about these issues may help people to reduce their forecast errors and take more informed decisions. As we discussed earlier, complex economic systems may have multiple equilibria. Movements between them depend on expectations and beliefs about others’ beliefs. That is especially so if there are strategic complementarities where the benefits of a strategy depend on the choice of strategies by others. Communication might help to coordinate beliefs so that a good rather than bad equilibrium results. Suppose that private investors begin to doubt the health of a bank which the central bank knows to be fundamentally solvent. A signal from the central bank that the bank is solvent may help to change beliefs, thus ensuring the continued liquidity and hence solvency of the healthy bank. But it may not be clear that the bank is solvent, and in practice there is often no smoke without fire. Communication may help to improve the credibility of public policy.

Overall, however, both from the point of view of how policy is determined, as well as how it is communicated, it is the broad distribution that matters. 8. Conclusions  Self-confidence is infectious. It can also be dangerous. How often have we drawn false comfort from the apparent confidence of a professional advisor promising certain success only to be disappointed by subsequent performance? Uncertainty pervades almost all public policy questions. Economics and many other disciplines are united by a common need to grapple with complex systems. As the crisis of the autumn of 2008 showed, such systems can sometimes be subject to abrupt changes, the precise timing of which cannot easily be identified in advance. But policy-makers are often expected to anticipate the unpredictable. How can they retain the trust of the public while being open about the true degree of uncertainty? Or, to put it another way, what is the appropriate bedside manner for policymakers when dealing with complex uncertain problems in a public debate? We have explained how the Bank of England tries to deal with some of those challenges in the context of monetary policy. We are sure we have much to learn, and our efforts to improve communication will continue for a long time to come. References Anderson, R and May, R (1991), “Infectious diseases of humans: dynamics and control.” Oxford University Press. Arrow, K (1995), Interview with “The Region” magazine, available http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=3675. at  Asch, S E (1951), “Effects of group pressure upon the modification and distortion of judgment”.