Bank of England analysts have revealed that Twitter has proven to be a useful tool in giving the bank a more wide-ranging spread of data and has provided a valuable insight into topics circulating on social media, helping to advance central banking.
In a recent blog post, Bank of England analysts David Bradnum, Christopher Lovell, Pedro Santos and Nick Vaughan discussed the unique benefits of analysing Twitter for the bank and how it can shape banking.
They pointed out that a constant flow of tweets and the ability to capture and analyse them immediately allowed the bank to monitor sentiment after the markets close and before they reopen.
Another of the attributes which was of interest to them was the generally explicit nature of social media. The tendency towards expressing emotions has helped the bank mine additional information on the general opinion on a topic and the regular use of external links has provided it with a valuable context and understanding.
Geographic information was another aspect of Twitter which the bank has focused on. Some Twitter users chose to disclose their general location which can help compose more granular views at a regional level, rather than having a single index for the entire country.
The method was previously used in Scottish Independence referendum as a predictive tool to give the central bank insight into the possibility of a bank run if it looked like Scotland was voting for independence from the UK. While the voting result became clear early on, the analysis confirmed to the analysts that Twitter was indeed a useful tool for banks to focus on.
In the blog the group say social media "provides a rich vein from which to mine information and text data" which can reveal broader patterns of human activity and their impact on the economy.