Instagram Is New Frontier for Central Banks. Is TikTok Next?

The world’s central banks are mixing it with wellness influencers, makeup experts and amateur chefs on Instagram.

Instagram (AP)

The world's central banks are mixing it with wellness influencers, makeup experts and amateur chefs on Instagram as they increasingly turn to the social media platform to get their messages across.

While Facebook and Twitter remain monetary authorities' social media of choice, they have markedly increased their use of Instagram over the past year. Seventy-one banks were on the platform as of December 2021, according to the Central Bank Directory, a 396-page tome on monetary policy makers and their institutions. 

Bank Indonesia is the most-followed central bank on Instagram, with just under 700,000 followers as of April 28. It's followed by the authorities in Venezuela and Brazil. The Federal Reserve Bank of Chicago is the most-followed U.S. monetary authority with 7,398 followers. 

Central banks' communications with the public will come under scrutiny this year as they seek to shepherd the world economy through a historic surge in inflation. Policy makers are embracing social media platforms to cut through to younger audiences, but that's not without risk.

“Young people are quite impatient, so central banks have to send a message using very short sentences,” said Sayuri Shirai, economics professor at Keio University and a former board member of the Bank of Japan. “But they have to do so very carefully, because it may lead to a complete misunderstanding.”

How the most-followed banks use Instagram varies widely. Indonesia posts multiple times a day, including tips on how to avoid being scammed online and engaging users on their favorite type of coffee. Brazil's central bank Instagram features a series of videos called “Calm Down! The Central Bank Explains,” with information on things like how to pay fines and how to avoid reckless spending during holiday sales. 

Venezuela's central bank, meanwhile, adopts a more matter-of-fact approach, posting nothing but key exchange rates just once a day. 

Increasing engagement with the public via social media isn't entirely risk-free for central banks. They will have to curate their online presence carefully if they want to avoid the type of reaction the St. Louis Federal Reserve encountered when it was deemed to have strayed too far from a monetary authority's area of expertise. 

The St. Louis Fed's sent a tweet in the run up to Thanksgiving in November last year pointing out that a vegetarian soy-bean based dinner would be cheaper and contain more protein than a traditional turkey dinner. The backlash was swift, with angry comments pointing out that no one wanted dietary advice from a reserve bank. 

“Central banking can be incredibly complex, technical, and nuanced and so full explanations can rarely be fit into a tweet,” said Megan Greene, a senior fellow at the Harvard Kennedy School. “They risk oversimplifying or miscommunicating in an effort to achieve clarity.”

One largely successful example of how social media can be used came from Jamaica's central bank. In 2019, policy makers there responded to criticism over poor public communication by issuing a series of reggae music videos, which ended up going viral, explaining changes to the country's monetary policy. 

Next Frontier

After Instagram, the next frontier for central banks may well be the video app TikTok. There again, Bank Indonesia is ahead of its peers. It started posting earlier this month, with videos touting Indonesia's potential as a center for Islamic finance and comedy sketches on how to pay parking fines online. As of April 28, the account has just 58 followers. 

The evolution of central banks from dry speeches at business chamber luncheons toward communicating over social media is a clear positive given it boosts transparency and nurtures understanding of what policy makers do, according to Greene.

“Want to know Schnabel's thoughts on calculating inflation in the eurozone? It's right there in the ECB's Twitter feed,” she said, referring to Executive Board member Isabel Schnabel. “It makes it much easier for anyone to catch up on a central bank's latest thoughts without having to dig through websites that are cumbersome for those of us who watch central banks for a living, let alone for normal people.”