Remaking Glenn

The image that many people have of the Reserve Bank of Australia is one of the stereotypical faceless banker.

Each month, we’re led to think, a group of men in pinstriped suits meet in a dark boardroom and make a decision about our mortgage rates. And most of the time – at least recently – they inflict a bit more pain on the average entrepreneur and homeowner.

It’s not like that, of course – the room they meet in is actually quite light and airy, and pinstripe suits are definitely out among your better bankers.

Just kidding. But the point is that so much about how the Reserve Bank operates is shrouded in a sense of mystery.

To some extent, this is very necessary. Every word that every RBA official says has the power to move markets and so people like RBA Governor Glenn Stevens must be very, very careful about what they say. It’s always cautious, measured and always devoid of the speculation that commentators love.

Naturally, this extreme caution does create this air of mystery. We’re not supposed to know what Stevens is thinking, and that’s the way he likes it.

Until this week at least, which has served as something of a coming out party for Stevens.

First he gave his first ever television interview to Channel Seven’s Sunrise program, and used the occasion to warn households that borrowing huge amounts to jump into property was not a good idea.

This morning he’s followed that up with a speech to the Wesley Mission’s Easter breakfast in Melbourne. During this speech, Stevens, a practising church-goer (he even plays guitar in the church band) has opened up about his beliefs, telling the audience that he disagrees with the idea that the GFC was an act of God.

“What we’ve learned is something that we know or should have known all along, which is that market economies are characterised by cycles, that human behaviour is characterised by alternately greed and fear,” he said.

“Therefore, economic systems are occasionally prone to this kind of instability. It’s always been that way and it always will be.”

Now, whatever you make of Stevens’ beliefs or his position on the housing market, I think it’s great to see Stevens putting a much more human face on the Bank.

The more transparency and openness we have around the RBA, the better. This week, Stevens has helped to change that faceless bankers issue and as a result I think entrepreneurs and households will have a better connection to the Bank and the way its officials think about the world.

For example, I didn’t know before this week that the RBA surveys 100 small businesses every month to gauge the environment they are operating in. And I am certainly happy to know that Glenn Stevens shares my concern about how the next generation are going to be able to afford a home.

The more we know about how the RBA works and why it makes the decisions it does, the more we’ll understand about the wider economy. And that’s a very good thing for everyone.