Harnessing the Power of Transparency
IMF News, February 8, 2017
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- Harnessing the Power of Transparency
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Bibliographic details
- Published: February 8, 2017
The role of transparency in the IMF’s mission
- The IMF’s job is to promote global economic and financial stability.
- Transparency underpins that mission by enabling countries to disclose data and policies, share information with other governments and the public, and collaborate daily—not only in crises.
- The IMF cannot do its job without the power of transparency; it is essential because what happens in one economy or financial system matters to many others in a hyper-connected world.
- The IMF’s membership: 189 member countries.
How the IMF harnesses transparency (institutional roles)
- Trusted adviser: governments often share market-sensitive information with the IMF.
- Global watchdog: raises red flags and encourages information sharing and collaboration.
- Fitness coach: provides hands-on technical assistance and training.
- Firefighter: provides financial assistance in times of need so economies can get back on their feet.
Empirical findings on transparency and financial outcomes
- New IMF staff research shows that greater data transparency—promoted through the IMF data standard initiatives—leads to a 15 percent reduction in the spreads on emerging market sovereign bonds—three months after the improvements are made.
- IMF staff research also shows that, during crises, capital flight is greater in the least transparent countries, which underlines the benefits for financial stability that transparency can bring.
- Quoted evidence: Stanley Fischer—“Nothing would help improve standards more than if countries that met higher standards were rewarded with lower borrowing costs”.
Transparency, public engagement, and accountability
- Transparency allows the IMF to contribute to public debate, be scrutinized by the public, and increase its accountability.
- Engaging the broadest possible audience is part of pursuing transparency; audiences include parliamentarians, labor unions, business owners, students, policy experts, “non-experts”, and think tanks.
Key publication details and references cited in the speech
- Speech by Christine Lagarde, Managing Director, International Monetary Fund; Atlantic Council, Washington, DC, February 8, 2017.
- References cited in the speech:
- Fischer, Stanley. “Financial crises and reform of the international financial system.” Review of World Economics 139.1 (2003): 1-37.
- Sangyup Choi and Yuko Hashimoto. IMF Working Paper: “The Effects of Data Transparency Policy Reforms on Emerging Market Sovereign Bond Spreads”, (to be published: 2017).
- Gaston Gelos and Shang-Jin Wei. “Transparency and International Portfolio Holdings”. The Journal of Finance (December 2005).
Speech by Christine Lagarde, Managing Director, International Monetary Fund; Atlantic Council, Washington, DC, February 8, 2017.