IMF Publishes New Transparency Code for Central Banks

The voluntary code allows central banks to measure transparency, which the IMF says is necessary to facilitate accountability and enhance public trust and support.

The IMF (International Monetary Fund) has published a new transparency code for central banks, aimed at enhancing accountability, governance and trust in central bank action, while also contributing to policy effectiveness.

The new code comes as the roles and mandates of central banks become broader and more complex, both in the aftermath of the 2008 global financial crisis and during the ongoing Covid-19 pandemic, where the “unconventional nature and growing scale of interventions” have come under intensified scrutiny.

The increasing responsibilities and significant expansion of balance sheets have led to a stronger demand for central banks to better explain what they do, how, and why – which is especially important in jurisdictions where their independence has come into question, the IMF says.

“More transparency and accountability are required to maintain public support, safeguard independence, and enhance policy effectiveness,” the IMF says.

The Central Bank Transparency Code is aimed at helping member countries to increase trust and support in central banks and facilitate more effective communication between central banks and their various stakeholders, thereby reducing uncertainty and contributing to better policy choices.

“Transparency is an instrument to facilitate accountability, allowing the public to better understand how central bank actions serve their best interest and are consistent with existing mandates.”

The voluntary code allows central banks to measure transparency under five key pillars: governance, policies, operations, outcomes, and official relations. Under each pillar, the code provides a list of best practices for key functions such as monetary or macroprudential policy.

The code is not designed to be a ranking tool, avoiding expressing preferences or making recommendations about mandate, institutional setups, or governance procedures.

The code also acknowledges that central banks may have legitimate reasons for delaying or withholding publication of certain information, offering guidance on the development of clear policies explaining and justifying what is kept confidential – such as information related to foreign exchange interventions, reserve management, supervisory decisions on individual institutions, and emergency liquidity assistance.

According to the IMF, the code will help central to continue playing their crucial roles in a manner that maintains and strengthens support from their stakeholders and society at large.

“As central banks are once again called to step up their actions, it is critical to continue building trust and credibility with the citizens they ultimately serve.”

The Central Bank Transparency Code is available here.

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