As you may have guessed though, the main reason for central bank transparency is not to make your weekends more relaxing. Central bankers today pursue a policy of broad information because we believe that transparency helps us fulfil our mandate. We are convinced that monetary policy is most effective and least disruptive if it is predictable: no news on monetary policy is good news. In the following, I would like to discuss why, today, central bankers think transparency is crucial for a successful monetary policy and how the Swiss National Bank attempts to achieve transparency in practice. I shall then debate the limitations of what transparency Finally, I would like to reflect upon how transparency in monetary policy may affect the relationship between you, the journalists, and us, the central bankers. 1. The case for transparency  At the Swiss National Bank we see three main reasons to be transparent about our monetary policy. The first reason is that we count on transparency to enhance the effectiveness of our monetary policy. In the public eye, central banks may be viewed as almighty. The plain reality is, however, that our open market operations only have a direct influence on current short-term interest rates. Economic activity and thus future price developments are, however, determined primarily by the shape of the yield curve, i.e. by the expectation of future monetary actions. Transparency about how we judge future inflationary pressures enables us to guide expectations about future short-term interest rates and thus also long-term interest rates.

Interest rates moved upwards before the Swiss National Bank adapted its operational target or its repo rate because financial markets trusted that we would increase interest rates. Given our objectives and our previous track record, it was credible that we would hike interest rates in the given economic environment. Central bank transparency can only improve monetary policy effectiveness if it increases the predictability of future monetary measures. I would like to emphasise that predictability relies not just on information and the communication of intentions, but also on whether the public trusts a central bank to realise these intentions. Central bankers can thus only benefit from transparency if their statements about future monetary policy are credible. Ultimately, we know that our words must be matched by our actions. 2  BIS Review 55/2006  4. Transparency and press coverage of monetary policy  Ladies and gentlemen, central bank transparency yields economic benefits because it enhances monetary policy effectiveness and reduces uncertainties. Moreover, in a de-mocratic state, transparency is essential if independent central banks are to be held accountable by the public. I am therefore convinced that central banks around the world will continue to pursue a policy of openness for a long time to come. This leads me to an important question for all of us here: how will transparency about monetary policy affect future relations between the press and central banks. Does central bank transparency mean that future monetary policy will be boring, and that press coverage of central bank interventions will become obsolete?