Digital communication of the Bank of Russia in social media

Shcheglov Maksim Yur'evich ORCID: 0000-0003-1388-520X Master’s Student, Department of Economic Theory and Economic Policy, St. Petersburg State University 199034, Russia, Saint Petersburg, nab. University, 7-9 st069668@student.spbu.ru Other publications by this author

Pashkus Vadim Yur'evich ORCID: 0000-0002-9512-3585 Doctor of Economics Professor, Department of Economic Theory and Economic Policy, Saint Petersburg State University 199034, Russia, Saint Petersburg, Saint Petersburg, nab. University, 7-9 v.pashkus@spbu.ru

Introduction

In the modern economy, effective communication with the public allows central banks to increase the level of confidence in their monetary policy. The better economic agents understand the policy, the more effective the measures taken. Clarity and legibility of textual information is a necessary minimum to ensure understanding and confidence in the ongoing monetary policy ^[1]. In addition to the traditional official formal channels of communication of the central bank, social networks play an equally important role today. This sets the monetary authorities the goal of ensuring the growth of trust through communication in social networks, taking into account the specifics of digital communication in this space.

In the current study, the authors aim to evaluate the communication of central banks in social networks using the example of the Bank of Russia. To achieve this goal, the authors solve the following tasks: (1) to characterize the role and importance of communication between central banks (and the Bank of Russia, in particular) in the ongoing monetary policy; (2) to identify the main formal channels of communication of the Bank of Russia; (3) to assess the readability of information published by the Bank of Russia on social networks and messengers.

The theoretical basis of the research is the work of A. Evstigneeva, Y. Shchadilov, M. Sidorovsky, P. Baranovsky, V. Doryn, T. Lyzyak and E. Stanislavsky, Hamza Bennani, devoted to the analysis of communication between central banks and their role in monetary policy. The main method of analysis is comparative analysis. The index and the Flash-Kincaid scale and Fog-Index are used as a method of evaluating the readability of texts. The empirical basis of the study is the publications of the Bank of Russia, mainly devoted to the topic of inflation and financial markets, for 2018-2023 on the social networks VKontakte and Telegram. The observation selection methodology includes the selection of 20 random publications per year for each social network on a selected topic. A separate sample was formed based on publications on social networks of key excerpts from press releases of the meeting of the Board of Directors of the Bank of Russia on the key rate.

Methodology and methods

In the current article, the authors use the definition of "communication", presented in the monograph by M. Castells: "the collective use of meanings in the process of information exchange" ^[2]. The term "digitalization" can be defined as "the transformation of information into digital form" ^[3]. One of the manifestations of digitalization is the transfer of communications to digital channels.

The communication of central banks is actively studied today in both foreign and Russian scientific publications. P. Baranovsky, V. Doryn, T. Lyzyak and E. Stanislavskaya determined that inflation expectations are more sensitive to central bank communications than to monetary policy decisions ^[4]. The authors also concluded that "the words and deeds of the central bank are substitutes." A.S. Blinder's work notes that successful communication of the central bank should make its policy more predictable and market expectations regarding future rates more accurate ^[5]. Hamza Bennani suggests that monetary institutions implement an adaptive (restrictive) monetary policy in response to an increase (decrease) in the degree of uncertainty expressed by the media.^[6]. The analysis of communication in social networks as a potential channel of influence on monetary policy is already being investigated in international studies. Thus, Peiran Jiao, Andre Veiga and Ansgar Walter showed that news coverage on social networks affects an increase in stock volatility and turnover on the stock market, which is consistent with the "echo chamber" model, where social networks repeat news, but some investors interpret repeated signals as really new information ^[7]. In another article by Cristina Angelico, Yuri Marcucci, Marcello Miccoli, Filippo Quarta, the authors confirmed that the social network Twitter can become a new timely source of forming beliefs among households, which can be included as an indicator in the model of consumer expectations in the market ^[8].

The specifics of the Bank of Russia's communication have already been the subject of research in domestic scientific papers over the past 5-10 years. Thus, in the study by A. Evstigneeva and M. Sidorovsky, using the example of the Bank of Russia, it is noted that the development of communication tools first leads to an improvement in the work of communication itself (verbal interventions), and then to an increase in the predictability of decisions ^[9]. The article by S.A. Merzlyakov and R.A. Khabibulin proves that the press releases of the Bank of Russia can indeed have a significant impact on the interbank rate and its volatility ^[10]. Using EGARCH-, VAR-models, as well as nonparametric tests, S.M. Drobyshevsky, P.V. Trunin, A.V. Bozhechkova and others confirmed the effectiveness of the regulator's information signals in terms of predictability of interest rate policy, the degree of impact of information signals on the money and foreign exchange markets ^[11]. In addition, the possibility of influencing the inflation expectations of the population and other non-monetary factors of inflation, the level and volatility of the real key rate ^[12], as well as the state of the domestic foreign exchange market ^[13] through communication by the Bank of Russia is emphasized. In general, the linguistic transparency of the monetary policy of the Bank of Russia is assessed at a high level ^[14].

A. Evstigneeva identifies the following methods for assessing the readability of a text: syntactic, lexical, morphological, phonetic, semantic, discursive ^[7]. In this article, the authors will limit themselves to using syntactic and linguistic methods. One of the most well-known readability indices, the Flash index, is based on the syntactic (average sentence length) and lexical (average word length) characteristics of the text ^[15]. This technique was later refined by Peter Kincaid ^[16]. Russian Russian and English language differences, the Flash-Kincaid index has also been modified for the Russian language.:

, where ASL is the average sentence length), ASW is the average number of syllables per word)

Table 1. Assessment of the difficulty of reading the text according to the Flash-Kincaid formula

The article also uses the Fog index (Gunning index). Taking into account the peculiarities of the Russian language of the data, the index has been modified:

Table 2. Assessment of the difficulty of reading the text by Fog Index

Results

In Russia, the potential of social networks in the field of communication with society has been noticed since the 2010s. At that time, federal authorities were mostly officially represented on social networks ^[17]. Analyzing the communication of the Bank of Russia, the following main channels can be identified: Bank of Russia websites, mass media, social networks and messengers, mobile applications, meetings with the target audience, conferences and workshops ^[18].

Otmar Issing proposed classifying monetary policy communication tools into five levels ^[19]. The first (basic) involves the publication of press releases, a press conference and a transcript of press conferences. The second (additional communication) is the discussion of the decision by the monetary policy committee and the voting results of the Board of Directors of the Central Bank. The third level (additional information on monetary policy and economic development) is the publication of reports, forecasts, statistics, surveys, interviews and briefings. The fourth level (monetary policy research) is research articles and conferences. The fifth level (transfer of knowledge about monetary policy) – presentations of the Central Bank, information booklets, videos and video games, educational contests/competitions.

Table 3. Communication of central banks: tools, channels and target audience

Source: Issuing O. Communication, transparency, accountability: monetary policy in the twenty-first century // Federal Reserve Bank of St. Louis Review. – 2005. – Vol. 87. – no. March/April 2005. – pp 65-83

Among the digital communication channels, communication can be distinguished through: the website of the Bank of Russia, official social networks and the application of the Bank of Russia "CB Online". Each of them can be divided into channels of direct affiliation of the Bank of Russia (official groups and the website of the Central Bank of the Russian Federation) and indirect (sites, VK groups and Telegram channels "Econs", "Financial Culture", "Museum of the Bank of Russia", etc.).

For each of the three channels of digital communication, certain communication tools are allocated: one-sided (publication of information and analytical comments, information about decisions of the Bank of Russia, press conferences, announcements, etc.) and with feedback (contacting by e-mail, via social networks and through the CB Online application, as well as comments under the post on social networks and messengers).

When analyzing the communication of central banks, it is necessary to understand that there are different audiences. Conventionally, the central bank's communication audience can be divided into two large groups: professional (investors, financial markets, credit organizations, large businesses, government authorities in the field of economic policy, economists, analysts, the scientific community, economic media and bloggers) and non-professional (ordinary citizens, small and medium-sized businesses, government authorities in the field of non-economic policy, non-economic media and bloggers, etc.).

Since 2018, the practice of using social networks has spread to the Bank of Russia: on July 6, 2018, the Bank of Russia officially registered the VKontakte group. The latest expansion of the Bank of Russia in social networks took place in 2022 – on February 25, the Bank of Russia channel was officially created in Telegram, and on March 15 – in Odnoklassniki. To date, the Bank of Russia is officially represented in the following social networks: VKontakte, YouTube, Telegram, Zen, Odnoklassniki ^[20]. It is obvious that the key target audience of social networks today can be differentiated by categories and groups. To understand in more detail the average portrait of the audience of the main groups and channels of the Bank of Russia in social networks and messengers, just such a tool as the Flash-Kincaid index and Fog Index will allow.

The calculation of the Flash-Kincaid index and Fog Index showed the following results (see Table 4). The dynamics of the Flash-Kincaid index is shown in Graph 1.

Table 4. Average results of the Flash-Kincaid Index and Fog Index

Graph 1. Dynamics of the value of the average Flash-Kincaid index for 2018-2023.

Based on the results obtained, it can be seen that the communication policy of the Bank of Russia as a whole is aimed at increasing the level of readability of publications. Nevertheless, according to the results of the Flash-Kincaid index, higher professional education in economics and finance is required to understand most texts on the VKontakte social network and the Bank of Russia website. Only in the Telegram messenger, the published material, due to shorter, more capacious and more frequent publications, can be understood to a greater extent by students of higher educational institutions. The authors also note that according to the Fog-Index, almost all publications are written in a scientific style, i.e. they require a scientific level of training to understand.

Separately, the authors calculated the Flash-Kincaid index for publishing excerpts of press releases of meetings of the Board of Directors of the Bank of Russia at the key rate. The result obtained for the VKontakte social network (18.44) is generally better than the texts of press releases themselves (11.84), but also requires higher professional education in economics and finance. These results are generally consistent with the results obtained in the study of the Bank of Russia (Shchadilova Yu., Evstigneeva A. International experience of communication on monetary policy decisions and macroeconomic forecasts [Electronic resource] / Bank of Russia: Analytical note. URL: http://www.cbr.ru/content/document/file/145990/analytic_note_20230331_ddkp.pdf ) and E.P. Perkova ^[21].

Conclusion

The transition to inflation targeting by the Bank of Russia has set it the task of establishing communication with society in order to conduct a more effective monetary policy ^[22]. International and domestic studies have shown the importance and effectiveness of communication tools in the policy of central banks.

In general, there are 6 main channels in the communication policy of the Bank of Russia: Bank of Russia websites, mass media, social networks and messengers, mobile applications, meetings with the target audience, conferences and workshops. Among the digital communication channels, communication can be distinguished through: the website of the Bank of Russia, official social networks and the application of the Bank of Russia "CB Online". The main audience is both professional and non-professional groups.

The results of calculating the Flash-Kincaid index and Fog-Index showed that the communication policy of the Bank of Russia is moving towards expanding audience coverage, as evidenced by the positive dynamics of the readability indices. Nevertheless, most publications on social networks (mostly on VKontakte) have a rather scientific style and require higher professional education in economics and finance. As a recommendation for further improvement of communication and institutionalization of the Bank of Russia's instruments, the authors emphasize the importance of consolidating this instrument at the legislative level in Federal Law No. 86-FZ dated 07/10/2002 "On the Central Bank of the Russian Federation (Bank of Russia)".