The Value of Private Meetings with Central Bankers

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Zoom URL: https://uni-frankfurt.zoom-x.de/j/67938308139?pwd=CCi5KjhqxLysejsC8KT1F4qbdjDBLh.1
Meeting ID: 679 3830 8139
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Abstract:

We investigate the ECB’s main informal communication channel, private bilateral meetings of Executive Board members with financial market participants. These meetings are frequent with some institutional investors meeting ECB board members almost every quarter, but they became less frequent after meeting calendars were disclosed publicly and they are subject to a nationality bias. Using trade-level data from Germany, we show banks build up portfolio positions in euro area equities after meeting ECB board members and before the ECB announces expansionary monetary policy decisions and report higher trading profits in subsequent quarters. ECB board members' professional experience and educational background, rather than connectedness or capture, drive the results, consistent with an accidental disclosure of private information. Hence, ECB’s informal communication likely indeed conveys meaningful information to the market, but our findings raise concerns about the neutrality and biasedness of the ECB’s communication policy.