And with it, central banks had taken another significant step. At the same time as monetary policy discretion was being granted, constraints were being placed around it. These were a necessary part of democratic accountability. These constraints included government-set success criteria – for example, inflation targets. In the jargon, many monetary policy regimes became characterised by instrument-independence but target-dependence. They combined rules with discretion – hence “constrained discretion”. Yet as significant was the accompanying shift in central bank transparency. This was seen as a necessary concomitant of delegated power. A century ago, the prevailing central bank ethos allegedly came from the then-Bank of England (BoE) governor, Montagu Norman: “never apologise, never explain”. Then, secrecy and mystique were believed to be key weapons in central banks’ armoury. Media appearances were rare. Central bank actions were confined to the back pages of newspapers, if at all. At the BoE, the aim was to keep the Bank out of the press and the press out of the Bank. With independence granted, all that changed. Politicians and the public demanded explanations – and sometimes apologies – for policy choices. Policy meetings were preannounced and minuted. And regular publications, such as inflation reports and financial stability reports, set out the analyses underpinning these decisions. Media appearances and newspaper articles began to appear. Central banks moved from the back to the front pages of newspapers. Journalists were no longer locked out, but instead ushered in for press conferences. Another step up the stairs had been taken.

That said, I also believe that more work remains to be done to broaden the definition of LIBOR so that it represents the reality of new funding patterns for banks, and to also tie submissions more closely and systematically to observable transactions. A second notable development was the publication of an international set of principles for financial benchmarks developed by the International Organization of Securities Commissions9 (IOSCO) in 2013. These principles include a set of 19 specific standards across governance, benchmark quality, methodology and accountability that have emerged as the international standard. IOSCO has rightly focused on tying benchmarks more closely  8  The Wheatley Review of LIBOR: Final Report. 9  Principles for Financial Benchmarks: Consultation Report, International Organization of Securities Commissions. BIS central bankers’ speeches  5  to observable, arms-length transactions. While a pure transactions-based rate will not solve all problems for all benchmarks, this is an important step toward eliminating excessive reliance on expert judgment. As part of the international reform efforts, the Federal Reserve played a lead role in a set of recommendations for the reform of reference interest rates produced by the Financial Stability Board (FSB). Former Governor Jeremy Stein, followed by Governor Jay Powell, co-chaired a working group with Martin Wheatley of the U.K. Financial Conduct Authority (FCA). This working group was charged with reviewing existing interest rate benchmarks, and for establishing and guiding a group of market participants to identify the feasibility and viability of adopting alternative reference rates.