In a nutshell I believe that to be effective, central banks need to be trusted; and in order to be trusted, they need: To have the ability to explain their policies and deliver on their mission; To be accountable for their use of taxpayers’ resources; And finally to lead by example.
The road is very narrow and failure to deliver can cause serious and long-lasting reputational damage. Risk is so important because we are facing this risk always as front-runners when the risk emerges. A ‘risk-free’ organisation does not exist. This is something that we should emblazon on the front of the central bank and also of the commercial banks: a risk-free organisation doesn’t exist.