Trust in Central Banks and Regulatory Bodies - Remarks by Gerry Cross, Director for Financial Regulation, Policy and Risk

23 May 2024 Speech

Gerry Cross

These remarks were delivered at a Central Bank of Ireland event on Thursday 23 May 2024. 

Good morning everybody, to those of you in the room and joining online.

I’m delighted we have a mixture of staff and external guests for this timely discussion on trust in central banks and regulatory bodies – why it matters, and what we must do to earn and build public trust.

The Central Bank places great importance on public trust. This is why we have placed it at the heart of our strategy. And we want to deepen our analysis of, and engagement with, the idea of trust in public authorities and how to secure this further in the modern world.

We have a very distinguished and expert line-up for this morning’s event.

Our keynote speaker, Onora O’Neill – who is joining us online - needs little introduction. A philosopher and ethicist, she is a former chair of the UK’s Equality and Human Rights Commission, former chair of the Nuffield Council on Bioethics, and served on the UK’s Banking Standards Board for a number of years, as well as being a cross-bench member of the House of Lords since 2000. Her insights have influenced the shape of UK policy in any number of complex areas at the intersection of ethics, justice, accountability and trust.

I will introduce Professors Maria Baghramian, Bobby Duffy, David Aikman and Jacint Jordana individually when our panel discussion gets under way. But their common thread is their work on Peritia, an EU Horizons 2020-funded project that investigated public trust in expertise over the 2020-2023 period.

Peritia stands for “Policy, Expertise and Trust in Action”, and stems from the Latin for practical knowledge, skill and expertise.

Led and coordinated by Professor Baghramian, Peritia brought together philosophers, social and natural scientists, policy experts, ethicists, psychologists, media specialists and civil society organisations from 11 partner institutions in 9 European countries seeking to understand how to enhance trust in public policy and public bodies.

From study of scientists who battled to communicate to the public during the Covid pandemic, to the “platform societies” created by social media companies and the risks these entail, Peritia has produced a number of key research outputs.

We believe many of those outputs are applicable to central banks and regulatory bodies, and very much look forward to hearing the insights from Peritia’s work.

I’m also delighted that Professor Niamh Moloney of the London School of Economics, and a member of the Central Bank Commission, is joining our panel. Niamh is an expert on European financial markets regulation and deeply articulate on issues of financial system trust.

And so why, then, do we believe that trust is so important for central banks and regulatory bodies? Why this seminar, and why have we emphasised it in our strategy?

As our current Governor, Gabriel Makhlouf, has noted, one common thread that enables all institutions to work is trust.

“Without the trust of the public that it serves, an institution will struggle to function, to be effective, and, ultimately, to persist.”

Former prime minister of Luxembourg and president of the Eurogroup, Jean-Claude Juncker, was famously attributed with saying the following about difficult decisions: “We all know what to do, but we don’t know how to get re-elected once we have done it.”

Central banks and regulators do not, of course, face the perils of elections. To a great extent, we are independent in the execution of our mandates. But the flipside of that independence is accountability to the public whom we serve, and the need to demonstrate we are always working in the public interest.

Agustin Carstens, general manager of the Bank for International Settlements, is among those who have emphasised that if citizens trust the actions of an authority, they will incorporate them in determining their own behaviour. Think of how monetary policy is used to control inflation by setting public expectations, for example.

This link between trust and individuals’ subsequent behaviour makes it “more likely that the authorities will achieve their objectives. In addition, trust fuels the legitimacy of policies. With trust, the public will be more willing to accept actions that involve short-term costs in exchange for long-term benefits. In sum, trust is vital for policy effectiveness.”1

More widely, public trust in the wider financial system – from the simple faith in the use of coins and notes as currency to reliance on financial services such as savings accounts, mortgages, and investments - is a requisite for stability.

The research shows that, in economics, trust is closely linked to concepts of market efficiency. That is to say, societies with higher levels of trust have more efficient markets (thereby reducing transaction costs) and higher economic growth rates.

Trust also influences an individual’s willingness to engage in risk-taking activities, and here there are direct links to entrepreneurship and innovation.  For example, a regulator can engender trust in a new technology by setting out clear guidelines and regulations, helping to encourage investment, entrepreneurship, and innovation.

This is in line with what has been stated by the United Nations Department of Economic and Social Affairs. They note that trust in public institutions is important for social and economic progress. It allows public bodies to more effectively plan and implement policies. And, very importantly, it gives confidence to consumers and investors, crucial to creating jobs and functioning of economies more broadly.2

From a regulatory perspective, it has been hypothesised that trust in the financial sector supervisor enhances trust in the financial sector as a whole. A Dutch study showed that respondents who had significant trust in the De Nederlandsches Bank were more likely to predominantly trust banks.3

And of course, if these are also good reasons to work at building trust, there is also the need to counter the risk of losing trust.

In Ireland, we need little reminder of the significant regulatory failings that were a factor in the financial crisis of 2008.

Conversely, trust in central banks can decline even when they are implementing policy ostensibly in line with their mandates.

And of course, there is the reality that we are in an era of misinformation, fuelled by digital communications and social media and likely to be jet-propelled by the rise of AI.

So, there is little doubt as to the importance of trust in public authorities – and more specifically for the purposes of this discussion of trust in central banks and financial regulators. But what exactly does it take for public authorities to be trusted – indeed, what exactly does it mean for such bodies to be trusted? What is required for such trust to exist? And in a world of misinformation, what does it take for an organisation to be considered trustworthy? These are some of the questions we will be exploring this morning.

The OECD identifies five main drivers of trust in government along two dimensions:

Dimension 1 – competence: responsiveness and reliability in delivering public services and anticipating new needs;

Dimension 2 – values: the principles of integrity, openness and fairness evinced by government / public authorities.4

Drawing on this work, and summarising a little for ease, I think it is worth bearing four ideas in mind as we head into this morning’s discussion and as we continue to deepen our focus in this area:

  • Competence;
  • Integrity;
  • Openness; and
  • Fairness.

Four watchwords perhaps for public authorities including central banks and financial regulators?

All of this is fertile ground for today’s seminar, and particularly for us in the Central Bank of Ireland.

Despite the challenges involved, we recognise the imperative to build trust in our work, to ensure our stakeholders view us as trustworthy for all the reasons outlined above. And we are keen to gain empirical insights on how we might work to achieve that strategic objective – in the common good.

In that respect, throughout this morning’s seminar, we would welcome insights, interventions and questions from the floor and online.

And now, it is my great pleasure to hand you over to Baroness O’Neill for this morning’s keynote address.


2“Trust in public institutions: Trends and implications for economic security”, Policy Brief, no. 108, June 2021.

3Van der Cruijsen et al. “Financial knowledge and trust in financial institutions.” DNB Working Paper (December 2019).

4An updated OECD framework on drivers of trust in public institutions to meet current and future challenges, OECD Working Papers on Public Governance No 48, December, 2021.