stephen s poloz : let me be clear - from transparency to trust and understanding remarks by mr stephen s poloz, governor of the bank of canada, to the greater victoria chamber of commerce, victoria, british columbia, 27 june 2018. * * * introduction i am happy to be here in victoria, a city with a beautiful natural setting and an economy that successfully blends old and new. you have the benefits of being a provincial capital and a natural tourist destination. and, today, the high - tech sector is your largest private industry. the bank of canada is also a blend of old and new. for those who have not seen our ottawa headquarters, at its centre is the original granite building, which was completed in 1938. its classical architecture projects a sense of security. its aim was to establish trust in challenging times. the building also embodies the approach that central banks took toward communications back then — meaning it is basically impenetrable. this approach can be summed up in a phrase attributed to sir montagu norman, then bank of england governor : “ never explain, never excuse. ” but times change. by the mid - 1970s, trust in central banks was low as inflation was high and rising. that was when renowned british columbia architect arthur erickson designed the expansion of our headquarters. erickson created two glass towers to flank the original granite building, linked by a towering glass atrium. all that glass foreshadowed the modern idea that central banks needed to be transparent to be trusted. building trust with transparency as usual, erickson was ahead of his time. the bank rarely felt obliged to explain its actions to canadians. this remained true even after moving from a fixed exchange rate to a floating one in 1970, which meant that the bank no longer had an obvious anchor to guide its policy. during the 1970s and 1980s, bank governors typically gave one public speech per year, while deputy governors gave none. a big step toward increased transparency came in 1991 with the first inflation - control agreement between the bank and the federal government. that agreement gave us a clear focus for our monetary policy. it also gave people a simple, easily understandable way to judge our performance over time. many other important advances in transparency followed. we started publishing a regular monetary policy report ( mpr ) to detail our economic forecasts and explain our policy. we moved to a system of fixed dates for announcing interest rate decisions, with press releases that explained our rationale. governors and deputies began speaking in

lower oil prices much more quickly than it otherwise would. working toward understanding all that being said, transparency is only helpful if people can understand what we are saying. as a central bank, we have multiple audiences. they all go about their daily lives making economic and financial decisions in the environment we create for them. yet, not everyone has the same level of interest or familiarity with economics. the father rushing to pick up the kids and get dinner on the table before soccer practice is not as focused on our interest rate announcements as, say, a bond trader on bay street. so, we need to tailor our communication to various audiences and deliver consistent messages through the right channels. these audiences include business leaders such as yourselves, business economists, financial market participants, academics, students and, of course, that soccer dad and other members of the general public, regardless of their occupation. consider how we communicate with the academic community. we have hundreds of economists on staff publishing cutting - edge research. this work must be credible with academics, because we rely on them to do research that complements ours, and to train the next generation of central bankers. so, the bank is making its data and models more open, in multiple digital formats that let researchers more easily verify, enhance and challenge our findings. but, believe me, if the bank were to communicate with non - specialists the same way we do with academics, we would not seem transparent at all. if you doubt me, just browse a few of the research papers on our website. we recently commissioned some public opinion research to help us tailor our communications. it showed that about half of canadians are interested in economic issues. but only about one2 / 6 bis central bankers'speeches third say they understand how the economy works. this means there are roughly 6 million canadians who are interested in the economy, but who are having trouble understanding economic issues. the challenge for us is to make sure that when we have a message to deliver, you will not need a degree in economics to understand it. research by bank staff shows that we have some work to do on this front. we have been using software to analyze the readability of our speeches and other communications. it turns out that most of our speeches score at university reading levels. that is fine for many people, but not for everyone. this is also true for our interest rate announcements, the mpr and the financial system review. only a handful of our public speeches over the past couple of years had a