IMF Executive Board Approves New Central Bank Transparency Code
IMF News, July 30, 2020
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Bibliographic details
- Published: July 30, 2020
Overview
- Press Release No. 20/258
- Date: July 30, 2020
- Washington DC: On July 2nd, the Executive Board of the International Monetary Fund (IMF) approved the new IMF Central Bank Transparency Code (CBT).
- The CBT updates the 1999 Monetary and Financial Policies Transparency Code and responds to recommendations from the 2017 Joint Review of the Standards and Codes Initiative.
CBT framework and development
- The CBT sets out a 5-pillar framework and proposed application of the CBT.
- The CBT principles and detailed practices were developed after extensive consultation with relevant stakeholders.
- Preparation benefited from:
- Guidance from a High-Level Advisory Panel consisting of eminent former central bank governors and academics.
- Input from an extensive consultation process with central banks and other relevant international organizations.
- The CBT is intended to provide strong, clear, and detailed guidance to central banks regarding their own transparency.
- The CBT acknowledges trade-offs between transparency and the legitimate need for confidentiality, including in contexts of:
- Market sensitive issues
- Financial stability considerations
- Personal data
- Some Directors saw scope for a broader definition of qualified confidentiality reasons.
- In the context of currency unions, Directors were concerned that publishing voting behavior may have important trade-offs and stressed the CBT should avoid being overly prescriptive.
Application, scope, and use
- Applicability:
- The CBT will be applicable, on a voluntary basis, to all IMF members, including less-developed economies.
- Design features:
- Modular
- Risk-based
- Proportional, to take into account country-specific circumstances
- Uses:
- Tailored diagnostic tool in IMF capacity development
- Facilitate voluntary use in Financial Sector Assessment Programs
- Facilitate voluntary use in IMF surveillance, such as Article IV consultations, and in an IMF‑supported program context
- Directors appreciated that descriptions of the range of practices are not intended to be a tool for ranking central banks’ transparency choices and welcomed the revised practice labels.
Executive Board assessment and views
- Directors broadly endorsed the CBT’s general principles and welcomed the opportunity to consider the staff proposal.
- Key reasons for enhanced transparency noted:
- Expanded mandates of central banks
- Unconventional policy actions
- Complex operations
- Evolving role in response to the 2008 financial crisis and the COVID‑19 pandemic
- Directors appreciated staff outreach and Advisory Panel contributions, calling the CBT a timely and useful tool to strengthen accountability and ensure more effective policy outcomes and better‑informed dialogue with stakeholders.
- Views on disclosure and caution:
- Directors broadly endorsed principles and practices related to foreign exchange management.
- Some Directors called for caution regarding information disclosure in foreign exchange management to avoid limiting central bank flexibility and prevent speculative transactions.
- Pilot reviews and timeline:
- Directors supported staff carrying out CBT pilot reviews on a voluntary basis and in close cooperation with relevant authorities, ensuring proper representation of Fund membership.
- Given competing demands on authorities and Fund resources considering the ongoing COVID‑19 crisis, a number of Directors were of the view that the two‑year timeline might need to be reconsidered.
- Use in Fund work:
- Directors supported the notion that the CBT could serve as a useful diagnostic tool in capacity development.
- Most Directors thought it could be helpful for Fund surveillance, on a voluntary basis.
Contact and media
- IMF Communications Department
- MEDIA RELATIONS
- PRESS OFFICER: Randa Elnagar
- Phone: +1 202 623-7100
- Email: MEDIA@IMF.org
- Twitter: @IMFSpokesperson
Source: IMF press release, July 30, 2020.
